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The Conflict of Laws in New Zealand: News and Comment

Commerce Commission v Viagogo AG: without notice injunctions against foreign defendants

By Jack Wass, Stout Street Chambers

Introduction

The New Zealand courts have no inherent jurisdiction over foreign defendants; a plaintiff must first serve the proceedings on the defendant in accordance with the High Court Rules. But it may be difficult or impossible to serve the defendant, particularly where they are obstructive or hard to locate. If a plaintiff requires urgent intervention from the Court, to freeze assets or to prevent the defendant committing harmful conduct, the court has the power to make an order “without notice” – in other words, before the defendant is served.

How can these principles be reconciled where the plaintiff seeks urgent interim relief against a foreign defendant?

The Commerce Commission has received hundreds of complaints about the online ticket agency Viagogo. It brought proceedings alleging that Viagogo violates the Fair Trading Act 1986. Viagogo is a company incorporated in Switzerland, operating through a website in New Zealand but with no physical presence here. The Commerce Commission sought an interim injunction preventing Viagogo from making certain misleading representations while the substantive case proceeds.

Viagogo has not yet been served, and it will apparently take six months to serve it through consular channels in Switzerland. It is aware of the proceedings, however, and sent a lawyer to the hearing. The interim injunction hearing thus proceeded on a “Pickwick basis”, which means that the defendant is permitted to make submissions even though formally it has not been served.

In a judgment released on 18 February 2019 (Commerce Commission v Viagogo AG [2019] NZHC 187), Courtney J held that the High Court had no jurisdiction to make an interim injunction. Even if the Fair Trading Act 1986 applied to Viagogo, the Court’s jurisdiction over a foreign defendant depends on service. The Court could not make any orders against Viagogo until it had been formally served in Switzerland. If the circumstances were truly urgent, the plaintiff could request permission for “substituted service” through alternative means (which would often be email). Otherwise the Court had no jurisdiction.

The practical implications of this approach are obvious, and the case gives rise to a number of interesting questions:

(1) Why is the Commission required to serve the proceedings through consular channels in Switzerland?
(2) It is right that the Court cannot grant interim relief without notice against foreign defendants?
(3) Can this problem be avoided by ordering substituted service?

Service of proceedings in Switzerland

A layperson may find it incredible that it would take six months to serve documents on Viagogo. The reason is that service is a formal process – an exercise of sovereignty – that must be completed in compliance with the law of the place where the defendant is located.

Under the High Court Rules, proceedings are usually served by “personal service”, where the documents are physically handed to the defendant in the manner familiar from television shows. Where the defendant is a company, the plaintiff could ordinarily serve them by leaving the documents at their registered office or even a branch. However it is also possible to serve a foreign defendant through any method of service that is permitted by the law of the place of service, or through official channels.

Rule 6.32(4) makes it clear, however, that service will be invalid if it is “effected contrary to the law of the country where service is effected.” Unlike New Zealand, many European countries regard service as an official act that cannot be completed by private lawyers or process servers. Valid service can only be effected through certain official channels.

Switzerland is such a country. Where there is no international agreement in place (and in this case there is not, because New Zealand has not ratified the Hague Service Convention 1965), then a plaintiff can only serve proceedings through consular channels (see Federal Office of Justice International Judicial Assistance in Civil Matters, 11 (https://www.rhf.admin.ch/dam/data/rhf/zivilrecht/wegleitungen/wegleitung-zivilsachen-e.pdf)). It is illegal to serve documents within Switzerland by any other means, including by post, under Article 271 of the Swiss Criminal Code.

It is presumably for this reason that the Commission conceded that Viagogo could only be served through consular channels.

One alternative should be kept in mind. A plaintiff is not restricted to suing a multinational company at its place of incorporation, but may also serve the proceedings on a branch office in a third country. This is because a company is regarded as being “present” wherever it has a fixed place of business. Where the third country has less restrictive rules about service of process, it may be much easier to serve the defendant in this way.

Can the Court grant interim relief without notice against foreign defendants?

The question of whether the New Zealand courts have jurisdiction to grant interim injunctions against foreign defendants before service is vexed.

This issue arises most often in the context of freezing orders (formerly known as Mareva injunctions), where the plaintiff wishes to freeze assets to prevent them being dissipated before judgment. The New Zealand courts often grant freezing orders without notice against foreign defendants, as do the English courts, although according to the approach adopted in Viagogo they have no jurisdiction to do so.

I discussed this issue in a blog post published in September 2018 (https://blogs.otago.ac.nz/conflicts/2018/09/29/does-the-court-have-jurisdiction-to-grant-interim-relief-without-notice-against-foreign-defendants/). In Discovery Geo Corporation v STP Energy Pte Ltd [2013] 3 NZLR 122, Kós J doubted whether the Court had any jurisdiction to grant an interim injunction until the defendant had been served, and the position appears to be the same in Australia (ANZ Grindlays Bank plc v Fattah (1991) 4 WAR 296.

A different approach was taken by the High Court in Equipment Finance Ltd v C Keeton Ltd (1999) 13 PRNZ 319. The Court found that it was sufficient for the plaintiff to establish ‘interim jurisdiction’ against non-resident defendants that they could properly be named as parties to the substantive action and the applicant would have the right to serve them outside the jurisdiction in due course, and there is a good arguable case that New Zealand will be the appropriate forum. While the defendants retain the right to object to jurisdiction on the usual grounds, this does not deprive the court of the ability to grant interim relief in the meantime.

On these authorities there is a direct clash between pragmatism and principle. The service rules recognise that the New Zealand courts have no inherent jurisdiction to regulate the conduct of overseas defendants; to join a foreign defendant to proceedings is an extraterritorial exercise of sovereignty that should not be permitted without express statutory authority. On the other hand, the Equipment Finance approach recognises that it may not be possible to serve a foreign defendant in time, particularly where the circumstances are urgent, and protects the defendant’s position by requiring the plaintiff to demonstrate that it has a good arguable case that service out of the jurisdiction will be permitted in due course, and that New Zealand will be the appropriate forum (see for a useful discussion Tim Stephens and Sarah Armstrong Injunctions and Other Relief (NZLS Seminar, October/November 2018) at 50).

In the absence of legislative reform, this remains an issue that justifies the consideration of the Court of Appeal. At the moment the only judgment from that Court is Advanced Cardiovasvular Systems Inc v Universal Specialties Ltd [1997] 1 NZLR 186, which involved a very different situation – an application for summary judgment, not an interim measure. The question must be analysed in the specific context of urgent interlocutory relief, particularly where prior notice to the defendant may compromise the effectiveness of the Court’s order.

Can the Court avoid this problem by ordering substituted service?

Rule 6.8 of the High Court Rules provides that if reasonable efforts have been made to serve a document by a method permitted under the Rules, the Court may direct that the document be brought to the attention of the defendant by other means, and be treated as being served. This mechanism is frequently used in the domestic context where the defendant is deliberately evading service; defendants will commonly be served by email or social networking site.

Substituted service will be no comfort to a plaintiff who wishes to obtain an order before the defendant is warned about the application, but could it be used in a case like Viagogo?

In Exportrade Corp v Irie Blue New Zealand Ltd (2013) 21 PRNZ 680, the Court of Appeal confirmed that substituted service was available on foreign defendants. The plaintiff would still need to show that the usual grounds for service were made out (either service without leave under Rule 6.27 or service with leave under Rule 6.28). It was not entirely clear from the Court’s judgment whether such service would be treated as service in New Zealand or outside New Zealand. This was clarified in 2017, when clause (2) was added to Rule 6.18:

(2) If a direction is given under subclause (1)(a) in respect of a document, the document must be treated as having been served at the place—
(a) at which the document is likely to have come to the attention of the person to be served; or
(b) where that person was or is likely to have been on the happening of the event or the expiry of the time specified under subclause (1)(a)(ii).

The Rules Committee explained that this amendment was not intended to affect the conditions for service out of the jurisdiction under Rules 6.27 and 6.28, but to clarify where the defendant is treated as having been served (Circular 105 of 2015). It means that a foreign company will almost always be treated as having been served in its place of incorporation or place of business.

English cases have suggested that substituted service may be used in the context of without notice applications. In Cecil v Bayat [2011] 1 WLR 3086 at [68] the Court of Appeal assumed that the courts had the power to grant an injunction without notice, and implied that substituted service may be appropriate to enable the injunction to be promptly served on the defendant (see also BVC v EWF [2018] EWHC 2674 (Admin) where substituted service was directed against a defendant in Switzerland).

It is doubtful whether substituted service should be used in this way as a matter of principle. The purpose of the rule is to enable the Court to deal with defendants who are evading service or cannot be located by any of the usual methods; it is not a means of avoiding jurisdictional rules. New Zealand law recognises that service should not be effected contrary to foreign law out of respect for the territorial sovereignty of the foreign state, and it is not appropriate to use substituted service to circumvent those rules. The UK Supreme Court has confirmed that substituted service cannot be ordered in a manner contrary to the law of the country where service will take place (Abela v Baadarani [2013] 1 WLR 2043).

The amendment to the High Court Rules makes this clear. Substituted service on a Swiss corporation who has no employees in New Zealand will be treated as having taken place in Switzerland. Since Swiss law prohibits service by any means other than consular channels, any form of substituted service would be invalid. It follows that substituted service is not an available solution to the problem created by Viagogo.

New Zealand Yearbook of International Law: Call for Papers

Posted on behalf of Jan Jakob Bornheim

The New Zealand Yearbook of International Law (Brill) is an annual, internationally refereed publication. The Editors call for both short notes and commentaries, and longer in-depth articles, for publication in Volume 16 of the Yearbook (2018), which will be published in 2019.

Notes and commentaries should be between 3,000 to 7,000 words. Articles may be from 8,000 to 15,000 words.

The Editors seek contributions on any current topic in public or private international law. The Editors particularly encourage submissions that are relevant to the Pacific, the Southern Ocean and Antarctica, and New Zealand.

Submissions will be considered on a rolling basis. However, the closing date for submissions for Volume 16 is 31 May 2019.

Contributions must be original unpublished works and submission of contributions will be held to imply this. Manuscripts must be word-processed and in compliance with fourth edition of the Australian Guide to Legal Citation. The Guide is available online at: http://law.unimelb.edu.au/mulr/aglc/about.

Submissions should be provided in English, using MS Word-compatible word processing software, and delivered by email to the General Editor at janjakob.bornheim@canterbury.ac.nz.

Jurisdiction over foreign land

By Jack Wass (Stout Street Chambers)

Immovable property, including land, gives rise to particular problems in the conflict of laws. Since the House of Lords’ judgment in British South Africa Co v Companhia de Moçambique [1893] AC 602 (HL), the English courts have disclaimed jurisdiction to determine title to or possession of foreign land, even where the defendant has been properly served. This rule is then subject to two ‘exceptions’: the court will act on the conscience of a defendant to enforce contractual or equitable obligations in personam relating to foreign land, and the court will retain jurisdiction where the question of title arises incidentally in the course of the administration of an estate.

New Zealand courts have assumed that the Moçambique rule forms part of our law. Despite what Lord Wilberforce described in 1978 as a ‘massive volume of academic hostility to the rule as illogical and productive of injustice’ (Hesperides Hotels Ltd v Muftizade [1979] AC 508 at 536), it survives in England in attenuated form. In Schumacher v Summergrove Estates Ltd [2014] 3 NZLR 599, the Court of Appeal was not required to determine whether it should be abolished in New Zealand – because the in personam exception applied – but noted academic criticism of the rule in terms suggesting that the Court might be sympathetic to its abolition.

The scope and continuing justification for the Moçambique rule came before the High Court in Foster v Christie [2018] NZHC 3103. The plaintiff and her mother had owned land in New Zealand as joint tenants. The mother severed the tenancy (replacing it with a tenancy in common), and then died in Ireland. The effect of severing the tenancy was to deprive the plaintiff of her mother’s share of the property, which would have otherwise passed to her by survivorship. She was also excluded from the will. The plaintiff alleged that her sister had procured her mother to sever the tenancy by undue influence. There were also separate causes of action relating to the mother’s capacity and funds in a New Zealand bank account.

Associate Judge Andrew found that the latter two causes of action were within the jurisdiction of the Irish courts, and that Ireland was the appropriate forum for their trial. The principal question was whether the Irish courts had jurisdiction over the claim relating to New Zealand land.

For this purpose, the court had to decide whether the claim came within the scope of the Moçambique rule: the New Zealand courts would not recognise a foreign court asserting jurisdiction over land in New Zealand, unless the in personam exception applied. In other words, if the claim was one that New Zealand law regarded as exclusively within the jurisdiction of the New Zealand courts, then it could not decline jurisdiction; if it was not caught by the Moçambique rule, then there was no objection to referring the matter to Ireland if that country was otherwise the appropriate forum.

The issue arose in a particularly acute fashion because the Judge found that Ireland was otherwise the appropriate forum for the undue influence claim to be litigated; if the Moçambique rule did not apply, then he would have exercised his jurisdiction to send the whole case to Ireland: [79]. On the facts, the Judge found that the Moçambique rule did apply. The real issue was whether the severance of the joint tenancies could be set aside, and that was claim in rem; the allegation of undue influence was just an element of that central issue: [55]. That was supported by the relief claimed: to set aside the severance, to restore the plaintiff’s position as legal and beneficial owner, and to have the District Land Registrar amend the title accordingly: [63].

Whatever the precise ambit of the Moçambique rule, the Judge’s conclusion is sound. This was not a case like Schumacher, where the plaintiff asserted an equitable interest in Irish land that would be vindicated by the declaration of a constructive trust. The plaintiff in this case sought to restore legal and beneficial title that would be good against the world.

Two particular justifications have been advanced for the Moçambique rule. One is based on the principle of comity, or the respect given under international law by each country’s courts for the legitimate domain of other countries’ legal systems. Since land is inherently local, the risks of conflict are obvious where courts of one country purport to determine – let alone transfer – legal title of foreign land. The second is the principle of effectiveness: the courts strive to avoid making orders that would be futile, and any order in relation to foreign land would require the recognition and implementation by foreign authorities.

Assessed by reference to those justifications, the Associate Judge’s conclusion is readily justifiable. It remains to be seen whether the Court of Appeal would be prepared to entertain the prospect of abolishing the Moçambique rule entirely, and leaving concerns about the assertion of jurisdiction over foreign land entirely to an enquiry into the appropriate forum. I will explore that issue in my next post.

Israeli judgment against New Zealand activists for Lorde’s “boycott” of Israel

Last year the New Zealand singer Lorde cancelled a concert in Tel Aviv following an open letter by two New Zealand-based activists urging her to take a stand on Israel’s illegal occupation of Palestine. A few weeks later, the two activists – Justine Sachs and Nadia Abu-Shanab – found themselves the subject of a civil claim brought in the Israeli court. The claim was brought by the Israeli law group Shurat HaDin, on behalf of three minors who had bought tickets to the concert, pursuant to Israel’s so-called Anti-Boycott Law (the Law for the Prevention of Damage to the State of Israel through Boycott). The Anti-Boycott Law provides that a person who makes a public call to boycott Israel commits a civil wrong and may be sued for damages (s 1). According to newspaper reports, Shurat HaDin claimed that the defendants’ call for boycott harmed the teenagers’ “artistic welfare”.

A few days ago, the Magistrates Court in Tel Aviv released a judgment upholding the claim and ordering the activists to pay NZ$18,000 in damages (plus costs). Counsel for Shurat HaDin has announced that they “will enforce this ruling in New Zealand, and go after [the defendants’] bank accounts until it has been fully realized”. The judgment has attracted world-wide attention. But the defendants, Sachs and Abu-Shanab, are adamant that they will not pay up, saying that “Israel has no right to police the political opinions of people across the world”, and that the claim “is a stunt of which the sole intention is to intimidate Israel’s critics”.

In this post, I want to offer some preliminary thoughts on the conflict of laws issues raised by the Israeli judgment. In particular, the post addresses – from a perspective of the New Zealand conflict of laws – the concern that the judgment represents some kind of jurisdictional overreach, before discussing the enforceability of the judgment in New Zealand or elsewhere.

Jurisdiction of the Israeli court to determine claim against New Zealand-based activists, in accordance with Israeli law

New Zealanders were quick to criticise the Israeli judgment as an illegitimate arrogation of power to police political opinions worldwide. Professor Gillespie from Waikato University, for example, described the judgment as “political theatre”, designed to cause fear that “if you’re critical of Israel, no matter where you are in the world, you could be sued”. The Free Speech Coalition tweeted that “[i]t is important that overseas threats of prosecution don’t lead to a chilling effect on speech within New Zealand” and that “the New Zealand campaigners should disregard this attempt at political censorship”. And Sam Bookman, in The Spinoff, wrote that it was “bizarre that two kiwis have become the first successful application of a law that was designed to silence critics and satisfy the needs of an increasingly authoritarian politician”. Even the Israel Institute of New Zealand spoke out against the judgment.

It should be noted that the claim in question was a civil claim brought by a private party seeking compensatory damages. It was not a criminal action brought by the Israeli government seeking to impose a fine or penalty, as suggested in some of the reporting on the matter. This point is worth emphasising because it means that, for the Israeli court, the question of whether or not it had jurisdiction to grant judgment against the New Zealand-based activists was a question of Israeli private international law. Notably, the Act is silent as to its cross-border scope (although the original draft Bill expressly contemplated its application to various groups of defendants, including foreign nationals). So the Israeli Parliament had left this question to the Israeli courts to resolve, in accordance with general rules and principles of Israeli private international law (see Arie Peled “The Israeli Anti-Boycott Law: Should Artists be Worried?” (2014) 32 Cardozo Arts & Entertainment Law Journal 751 at 769ff).

I am not an expert in Israeli private international law, and I do not have access to the decision, so I cannot comment on the validity of the Court’s decision as a matter of Israeli law (although I wonder whether the result would have been the same if the claim had been defended). What I wish to do instead, in light of the suggestions that the judgment amounts to a jurisdictional overreach, is to ask whether Israeli private international law here produced an outcome that infringed New Zealand notions of international comity or conflicts justice. In other words, is the judgment inconsistent with what New Zealand private international law would consider an appropriate or legitimate exercise of cross-border jurisdiction? In answering this question, it is helpful to distinguish between the court’s personal jurisdiction over the defendants, on the one hand, and its application of the Israeli Act to the defendants’ conduct, on the other.

Personal jurisdiction: First, the fact that the Israeli court exercised personal jurisdiction over the defendants is not in itself problematic. By comparison, New Zealand courts readily assume personal jurisdiction over foreign-based defendants, provided there is a sufficient connection of the claim to New Zealand (rr 6.27 and 6.28, High Court Rules). If the defendant is outside of New Zealand at the time of service of the claim, the court will exercise restraint in assuming jurisdiction over the defendant (Wing Hung Printing Co v Saito Offshore Pty Ltd [2010] NZCA 502, [2011] 1 NZLR 754 (CA) at [27]-[30]), but the exercise of jurisdiction over foreign defendants is no longer considered exorbitant as a matter of principle. The greater the connection of the action to New Zealand, the more appropriate it is for the court to assume jurisdiction. The claim in this case alleged harm to Israeli individuals, as a result of the defendants’ plea that Lorde cancel her concert in Israel. Hence, there was a meaningful link between the action and Israel; and so, from a New Zealand perspective, it would be difficult to characterise the extent of the Israeli’s exercise of personal jurisdiction as exorbitant.

Application of Israeli law: The second issue, however, is not as clear-cut. Did the application of the Israeli Act to the defendants’ conduct go against New Zealand notions of comity or conflicts justice? A good starting point for this inquiry may be to look to public international law, and to ask whether Israel exceeded its prescriptive jurisdiction in applying domestic law (ie the Act) to foreign facts (ie the conduct of the New Zealand-based activists). But public international law merely defines the very outer limits of Israel’s prescriptive jurisdiction. It is private international law that helps us determine the proper reach of domestic law, using principles of subject-matter jurisdiction and choice of law. Is it unusual then, by reference to such principles commonly applicable in New Zealand (and elsewhere), that Israeli private international law led to the Act being applicable in this case?

At first sight, the answer may appear to be ‘no’. According to Israeli substantive law, claims under the Act are treated as civil wrongs (ie torts). If the same characterisation was applied for the purposes of private international law, a court might simply apply ordinary choice of law rules governing torts (see Peled “The Israeli Anti-Boycott Law”). The content of these rules differs from country to country, although the most common connecting factors are the locus delicti and the locus damni. Based on such choice of law rules, it would not be far-fetched to argue that Israeli law was the law applicable to the alleged wrong, given that the relevant harm here occurred in Israel. Thus, if the matter was characterised as tortious, it is difficult to see how New Zealanders could feel put out by the Israeli court’s application of Israeli law to the activities of New Zealand-based defendants.

But it is doubtful that claims under the Act should be characterised as ordinary civil wrongs for the purposes of private international law. Common law principles of characterisation require the court to consider the function of the substantive law in question, and to look beyond domestic forms or categorisations (see L Collins (ed) Dicey, Morris and Collins on the Conflict of Laws (15th ed, Sweet & Maxwell, 2014) at para 2-039). The purpose of the process of characterisation is to identify the law that can most appropriately govern the issue, in light of the foreign connections of the claim (see Schumacher v Summergrove Estates Ltd [2014] NZCA 412, [2014] 3 NZLR 599 at [36]).

The key function of the Israeli Act is to proscribe conduct calling for the boycott of Israel. Claims under the Act thus differ from ordinary civil wrongs, such as the general economic torts, in that they are intrinsically linked to Israel. They are concerned with economic, cultural and academic damage caused by a boycott of Israel, rather than the boycott of any country. Forum laws that are specifically dedicated to the protection of domestic interests are not ordinarily suited to multilateralism (ie the application of a multilateral choice of law rule such as the lex loci delicti rule). This means that their scope is determined unilaterally. In the eyes of New Zealand private international law, what would be an appropriate unilateral delimitation of a statute in the nature of the Israeli Act?

This is not an easy question (not least because it involves an unlikely hypothetical scenario of New Zealand facing calls for political boycott). What is clear is that countries ordinarily avoid giving universal effect to their domestic laws: domestic laws do not apply to the entire world. So it would be necessary to impose some limitations on the court’s subject-matter jurisdiction. That is because it would be contrary to the interests of foreign states and parties to apply domestic law to conduct that lacks sufficient connection to the forum, in order to uphold distinctly domestic policies. The more forum-centred the policy, and the greater the interference with the defendant’s freedoms, the closer should be the connection to the forum before its law can be applied. (Compare, for example, the critical response to the broad application of US competition law by US courts on the basis of the so-called “effects doctrine”)

In my view, from a perspective of the New Zealand conflict of laws, application of the Israeli Act to the New Zealand activists raises legitimate concerns. The defendants’ call for boycott appeared in The Spinoff, a New Zealand publication. It was targeted at Lorde, a New Zealand singer. The Act imposes liability for an expression of political opinion, amounting to a significant interference with the defendants’ basic freedoms. The interference goes beyond the kind of interference ordinarily associated with civil wrongs (compare, for example, the torts of defamation or inducing breach of contract). Presumably the justification for extending liability to the New Zealand activists was that the harm was suffered in Israel. But the actionable harm, too, appears to be of a highly political nature (the teenagers apparently claimed that they suffered “damage to their good name as Israelis and Jews”). In these circumstances, when measured against New Zealand principles of subject-matter jurisdiction, the fact that the harm was suffered in Israel should not be sufficient to justify the application of the Israeli Act to New Zealand-based defendants.

Enforceability of the Israeli judgment in New Zealand

Counsel for Shurat HaDin apparently intends to enforce the Israeli judgment in New Zealand, pointing to reciprocal arrangements between New Zealand and Israel for the enforcement of foreign judgments. To the best of my knowledge, there is no such arrangement in place between the two states, which means that Shurat HaDin will have to rely on New Zealand’s common law rules on the enforcement of foreign judgments. These rules require Shurat HaDin to bring separate proceedings against the activists in New Zealand seeking enforcement of the Israeli judgment. In other words, the Israeli judgment has no direct effect in New Zealand.

A claim for enforcement will only succeed if it satisfies New Zealand rules on the enforcement of foreign judgments. These rules require that the Israeli court must have had personal jurisdiction over the defendants. Crucially, whether or not the Israeli court had personal jurisdiction over the defendants must be determined in accordance with New Zealand – not Israeli – rules of jurisdiction (Von Wyl v Engeler [1998] 3 NZLR 416 (CA)). However, New Zealand rules of personal jurisdiction apply much stricter standards when determining the jurisdiction of foreign courts (as opposed to the jurisdiction of the New Zealand court). They require that the defendants were present in the foreign country (ie Israel) at the time of being served with the original (is Israeli) proceedings, or that they submitted to the foreign (ie Israeli) court’s jurisdiction by taking a step in the proceeding (Von Wyl). It is not sufficient, as it would have been for the purposes of a claim in the New Zealand court (see above), that the claim had a real and substantial connection with Israel.

I am not familiar with the background to the case, but it appears that neither of these requirements – presence or submission – is satisfied here. In short, based on New Zealand law, the Israeli court probably lacked personal jurisdiction over the defendants, with the result that the judgment will not be enforceable here.

Even if the Israeli court was found to have had personal jurisdiction over the defendants (for example, because the defendants somehow submitted to the Israeli court’s jurisdiction), there is a good argument that the defendants would have a defence to enforcement on the basis that the Israeli judgment is contrary to public policy.

It is true that the defence of public policy imposes a high threshold. According to the Court of Appeal, enforcement would have to “shock the conscience” of a reasonable New Zealander, or “be contrary to New Zealand’s view of basic morality or a violation of essential principles of justice or moral interests in New Zealand” (Reeves v One World Challenge [2006] 2 NZLR 184 (CA) at [67], [104]). In Basing v Brown [2016] NZCA 525, [2017] 2 NZLR 93, the Court of Appeal seemed to require a breach of an “absolute” value, holding that application of Hong Kong law to determine the enforceability of a mandatory retirement age was not contrary to public policy – even though, based on the Human Rights Act 1883 (NZ), forced retirement would have breached the plaintiffs’ right to be free from age discrimination. (The decision was overturned by the Supreme Court on different grounds)

But, as I have argued before, New Zealand courts should take account of relevant connections to New Zealand when determining whether the defence of public policy can be invoked (Maria Hook and Jack Wass “The Employment Relations Act and its effect on contracts governed by foreign law” [2017] New Zealand Law Journal 80). Here, the judgment implicated conduct by New Zealand-based activists that was closely connected to New Zealand, in the form of the publication of an open letter by The Spinoff. The target of the letter, too, was a New Zealander. Based on New Zealand standards, publication of the letter amounted to an exercise of the right to freedom of expression, and it may be doubted whether the damages imposed were truly “compensatory” in nature. In these circumstances, the defence of public policy should be available. In fact, it has been argued that enforcement of a foreign judgment in such a case could amount to an interference by the New Zealand courts with the defendants’ right to freedom of expression, engaging the New Zealand Bill of Rights Act (see William Young J in Reeves at [90]).

Enforceability of the Israeli judgment in countries other than New Zealand

If the judgment is not enforceable in New Zealand, it is likely that its practical implications for the defendants will be limited. Of course, if the defendants were to travel to Israel or acquire assets there, Shurat HaDin could take steps to enforce the judgment locally. Counsel for Shurat HaDin has also indicated that they may seek to enforce the judgment in a third country, like the United States.

It is possible that US rules for the enforcement of foreign judgments would be easier to satisfy than those of New Zealand. In particular, in order to determine whether the Israeli court had personal jurisdiction over the defendants, some US courts would ask whether the defendants had sufficient “minimum contacts” with Israel. This inquiry is focused on American requirements of due process and may prove to be a relatively flexible tool (thus, it may be sufficient that the defendants intended to harm the plaintiffs in the forum state: Calder v Jones 465 US 783 (1984)). A defence of public policy, too, may be more difficult to satisfy, given that US lawmakers are currently considering their own Israel Anti-Boycott legislation. But even so, if the defendants do not have assets in the United States, and if any travel to the country involves only a temporary stay, it would prove challenging for Shurat HaDin to take effective enforcement action against the defendants there.

Does the court have jurisdiction to grant interim relief without notice against foreign defendants?

By Jack Wass (Stout Street Chambers)

Principle and expediency sometimes collide in the conflict of laws. This note discusses one example: where the court is asked to grant interim relief – such as a freezing order – on a without notice basis against a foreign defendant.

It is a basic principle of New Zealand private international law that the court has no inherent jurisdiction over defendants who are beyond the territorial jurisdiction of the court. While the court has inherent jurisdiction to regulate the conduct of persons within the territory, personal jurisdiction over foreign defendants derives from service of originating process. Proceedings may only be served outside the jurisdiction with statutory authority. This authority is found in delegated form in rules 6.27 and 6.28 of the High Court Rules.

Since the 1970s, the English and New Zealand courts have recognised a power to grant freezing orders – a form of interim relief originally known as Mareva injunctions – where there is cause to suspect that a (prospective) judgment debtor may dissipate their assets, and thus frustrate the plaintiff’s ability to enforce their judgment. The freezing order is a personal remedy (in other words, it acts in personam and not in rem).

The earliest cases (Mareva Compania Naviera SA v International Bulk Carriers SA [1975] Lloyd’s Rep 509 (CA) and Nippon Yusen Kaisha v Karageorgis [1975] 1 WLR 1093 (CA) in England, and Hunt v BP Exploration Company (Libya) Ltd [1980] 1 NZLR 104 (HC) in New Zealand) involved assets in New Zealand and a defendant overseas. Applications for freezing orders are usually made on a without notice (or ex parte) basis – that is to say, the court is asked to make an order before the application is served on the defendant, so that the defendant is not given the opportunity to dispose of the assets in the meantime. The New Zealand courts routinely make freezing orders against foreign defendants on a without notice basis (for a recent example, see Kuyt v Kuyt [2018] NZHC 619).

On its face, this is difficult to reconcile. If the court has no inherent jurisdiction over foreign defendants, and its power to regulate their conduct depends on service in accordance with statutory authority, how does the court have jurisdiction to freeze a person’s assets before the proceedings have been served?

The position in Australia seems to be that the court has no power to grant a freezing order where the defendant to the substantive proceedings is outside the jurisdiction until they have been served with originating process, at least where the substantive proceedings will be heard in Australia (ANZ Grindlays Bank plc v Fattah (1991) 4 WAR 296). Kós observes that ‘it remains essential that the defendant is properly made a party to the proceedings’ (‘Freezing and seizing orders’ in Blanchard (ed) Civil Remedies in New Zealand (2 ed, Thomson Reuters, 2011) at 304). And in Discovery Geo Corporation v STP Energy Pte Ltd [2013] 2 NZLR 122, which involved an application for interim relief in support of an arbitration that would have operated in the same way as a freezing order, Kós J doubted whether the court would have jurisdiction until the applicant had been served, and any protest to jurisdiction determined.

This question as analysed in Equipment Finance Ltd v C Keeton Ltd (1999) 13 PRNZ 319 (HC). The court held that it would be sufficient to establish ‘interim jurisdiction’ against non-resident defendants that they could properly be named as parties to the substantive action and the applicant would have the right to serve them outside the jurisdiction in due course, and there is a good arguable case that New Zealand will be the appropriate forum. While the defendants retain the right to object to jurisdiction on the usual grounds, this does not deprive the court of the ability to grant interim relief in the meantime. This approach is implicitly endorsed by rules 32.2(1), which empowers the court to grant without notice freezing orders without distinguishing between resident and non-resident defendants. Indeed the ability to grant effective interim relief has become particularly important now that rule 32.5 expressly empowers the court to grant interim relief in support of foreign proceedings (where the New Zealand court will never assume jurisdiction over the substance of the dispute).

A separate question arises where the defendant has been served, but has filed a protest to jurisdiction. There is a line of New Zealand authority holding that the court has no jurisdiction to grant interim relief – of any kind – where a protest to jurisdiction is intimated or outstanding. The first case in this line concerned an application for summary judgment, where the substantive nature of the application necessarily assumes jurisdiction (Advanced Cardiovascular Systems Inc v Universal Specialties Ltd [1997] 1 NZLR 186 (CA)). Nevertheless, the principle was expressed to apply to interlocutory applications generally and has been so applied by the High Court in subsequent cases (see eg Rimini Ltd v Manning Management and Marketing Ltd [2003] 3 NZLR 22 (HC)).

As Goddard & McLachlan have argued, this does not follow as a matter of principle, since interim relief does not necessarily presume jurisdiction over the substance, and it has the potential to seriously undermine the utility of freezing orders against foreign defendants (Goddard & McLachlan Private International Law: Litigating in the Trans-Tasman Context and Beyond (NZLS, 2012) at 95). It is open to the Court of Appeal to clarify the scope of the principle recognised in Advanced Cardiovascular, and to preserve the utility of without notice interim relief.

Where the parties have failed to plead foreign law, when can the court apply New Zealand law in default?

By Jack Wass (Stout Street Chambers)

This is the second of two posts about the pleading and proof of foreign law.

In general, parties can choose whether or not to plead foreign law; where it suits them to do so, they can choose not to plead foreign law and rely on New Zealand law in default. In my previous post, I explained that where the parties had chosen not to rely on foreign law, the court should not conduct its own enquiry into the content of that law; it must apply New Zealand law if it applies any law.

However, in recent years there has been a growing acceptance that there are circumstances in which the parties and the court cannot simply fall back on New Zealand law.

The cases fall into three categories:

(a) Where, on proper analysis, one party’s claim positively relies on the content of foreign law, and they have failed to prove it;

(b) Where the case so obviously raises a question of foreign law that it is necessary as a matter of case management that the parties plead to it; and

(c) Where New Zealand law is inherently local and it would be too strained or artificial to extend it to the foreign facts in issue.

The first category can be broken down further into three situations:

(a) Where the parties have proved the content of foreign law on some issues but not others, the courts can sometimes apply the law of the forum to ‘plug the gaps’. But in other cases the English courts have refused to do this, so that parties omit to plead the law applicable to all issues at their peril (Global Multimedia International Ltd v Ara Media Services [2006] EWHC 3107 (Ch); Tamil Nadu Electricity Board v St CMS Electricity Co Ltd [2008] 2 Lloyd’s Rep 484; cf Balmoral Group Ltd v Borealis UK Ltd [2006] 2 CLC 220 and Law Debenture Trust Corp plc v Elektrim SA [2009] EWHC 1801 (Ch)).

(b) In other cases, a party may have proved the primary rule (for example, by adducing a copy of the statute) but failed to prove the rules of interpretation necessary to resolve an ambiguity in its construction. Again, in some cases the courts will apply New Zealand rules of interpretation in default (Koops v Den Blanken (1999) 18 FRNZ 343 (CA)) but in other cases the court will be left in such uncertainty that further evidence is required (Cheon v Attorney-General HC Auckland CIV-2007-404-7669 at [49]).

(c) Third, the primary rules may empower the decision-maker to exercise a discretion. Where there is no evidence of the principles that would apply to the exercise of the discretion, the court is left in a difficult position. The notorious example is the High Court of Australia’s decision in Neilson v Overseas Projects Corp of Victoria Ltd (2005) 223 CLR 331, where the majority found that the statute had to be interpreted as if it were a domestic statute, while the dissenters found that the failure to prove the principles that would govern the exercise of the discretion meant that the primary rule could not be applied at all.

In the second category of case, the judge may decide that the case so clearly raises a question of foreign law that it would not be fair or consistent with the overriding principles of civil procedure to allow the parties to fall back on the law of the forum (Belhaj v Straw [2014] EWCA Civ 1394, [2015] 2 WLR 1105); this is an exception to the usual rule.

The third category is where the New Zealand law in question is inherently local or creates a special institution, so that it cannot be extended to the foreign facts. Where a general body of rules is concerned (such as tort, or contract, or restitution), it will usually be possible to treat the case as if it were a domestic case and apply New Zealand law accordingly. But where the law in question is purely local, that might not be appropriate. As the Federal Court of Canada put it, the cases demonstrate:

… reluctance of the judges to dispose of litigation involving foreign people and foreign law on the basis of provisions of our legislation peculiar to local situations or linked to local conditions or establishing regulatory requirements. Such reluctance recognizes a distinction between substantive provisions of a general character and others of a localized or regulatory character… (The Ship Mercury Bell v Amosin (1986) 27 DLR (4th) 641 (FCC)).

Particular problems arise with statutory regimes. In Shaker v Al-Bedrawi [2003] Ch 350 (EWCA), the plaintiff’s claim depended on the status of a distribution. That in turn depended on technical company rules about the maintenance of reserves and the extent to which distributions could be made out of profits. The English Companies Act could not be applied literally, since it only extended to English companies, and it was not possible to ‘adapt’ the law to apply in the circumstances. It followed that because the claimant had failed to prove the content of Pennsylvanian law, the English companies legislation could not apply (although English common law rules of company law could, to the extent that they had survived the passing of the Act).

To similar effect, in Damberg v Damberg (2001) 52 NSWLR 492 the New South Wales Court of Appeal refused to presume that German tax law was the same as Australian law, with the consequence that the claim simply failed.

The ambit of this limitation remains uncertain, and the criteria for assessing whether a particular rule is ‘inherently local’ or creates a ‘special institution’ are yet to be settled. In the meantime, the safest course is to ensure that all of the necessary rules are proved. If there is any doubt about what law will apply at trial, and evidence cannot be briefed to account for that contingency, then a preliminary determination on choice of law may be necessary.

Where the parties have failed to plead foreign law, can the Court determine foreign law for itself?

By Jack Wass (Stout Street Chambers)

A judge in domestic litigation is deemed to know New Zealand law. While judges will be guided by the submissions of counsel, they determine the content of New Zealand law for themselves. Foreign law is different: a New Zealand judge cannot be assumed to know anything about the content of foreign law, or even when it should displace the New Zealand rules that would otherwise be applied. It follows that foreign law must be pleaded and it must be proved. The deployment of foreign law is an intrinsically tactical and party-driven process characteristic of New Zealand’s adversarial civil procedure.

The approach of New Zealand private international law may be summarised in five propositions:

(a) Foreign law is a question of fact that must be established to the satisfaction of the judge; the court generally cannot take judicial notice of foreign law.

(b) The content of foreign law must be established by evidence. This may be the evidence of expert witnesses, or (where permitted by s 144 of the Evidence Act 2006) documentary evidence, or by a combination of them.

(c) The judge must assess and weigh those sources, including the underlying authorities on which the experts rely, the objective being to determine how the dispute would be decided if it were heard in the courts of that country.

(d) Ordinarily, the court will only consider foreign law where the parties have chosen to plead it and thus put it in issue; it follows that the party who seeks to rely on foreign law bears the burden of establishing it.

(e) Where the parties have chosen not to plead foreign law, or have failed to prove its content, then the court will ordinarily apply New Zealand law.

In these posts, I will highlight the difficult issues at the margins of the last two propositions. What are the limits of the “ordinary” rules?

The challenge that judges face where the parties have failed to plead or prove foreign law – proposition (d) – is illustrated by a pair of cases decided by Associate Judge Bell.

Air Tahiti Nui SAEML v Pounamu International Ltd [2001] NZCCLR 16 (HC) concerned a consultancy agreement governed by the law of French Polynesia. The Judge noted that because the parties had failed to plead or prove French Polynesian law, he was required to apply New Zealand law. Although this could create an injustice where the parties’ rights and obligations were different under French Polynesian law, this was the risk that the parties took.

The Judge had been faced with the same situation in Industrial Group Ltd v Bakker HC Auckland CIV-2009-404-6432, 12 April 2010, where the parties submitted copies of the South Australian legislation but nothing more. By contrast, the Judge found in that case that it would be ‘not be safe’ to apply New Zealand law in default, because of the risk of an injustice arising from differences with New Zealand law. Having apparently undertaken his own research into South Australian law, he concluded that under both laws there was an arguable dispute justifying the statutory demands being partially set aside. Although the judgment was set aside on other grounds, the Court of Appeal praised the Judge’s analysis of the (South Australian) legal issues: [2011] NZCA 142, (2011) 20 PRNZ 413 at [8].

What approach was correct?

In Dymocks Franchise Systems (NSW) Pty Ltd v Todd [2004] 1 NZLR 289 (PC), the Privy Council noted that ss 39 and 40 of the Evidence Act 1908 (replaced by s 144 of the Evidence Act 2006) allowed the court to assess the content of foreign law by referring to sources itself, without the benefit of expert evidence. Shortly after, the Court of Appeal held that a judge could inform him or herself from sources ‘whether they have been put before it by counsel or consulted by the members of the court on their own initiative and [in an appeal] whether or not the court below has had the opportunity of considering them’ (Skye Court Pty Ltd v Mason CA6/03, 18 June 2003 at [10]).

Whatever the position may have been under ss 39 and 40 (which were expressed in different terms), we doubt that the court’s powers now go that far. While s 144 dispenses with the need to prove foreign law through the medium of an expert, evidence of foreign law must still be produced by the parties. Section 144 empowers the parties to ‘offer’ certain material, and says nothing about the court’s power to research the law on its initiative. It is unlikely, therefore, that courts are permitted to decide a case on the basis of authorities identified in the course of their own research, not cited or relied upon by the parties. Quite apart from the formal position under s 144, that would give rise to natural justice considerations.

At the same time, the idea prevailing in England that a judge will be tainted by even contemplating sources outside the four corners of the expert’s brief is unrealistic, and where the judge considers that further sources may be available, he or she would be free to seek the parties’ submissions on them, who can thus put them in evidence. And where the parties have relied, for example, on a judgment or a textbook, the court is and must be free to conduct their own assessment of the evidence in context.

With sympathy for the position that judges are placed in when faced with a case that clearly raises issues of foreign law that have not been adequately pleaded or proved, the court cannot remedy that defect as they could with a question of New Zealand law. Notwithstanding the clear and accurate way that Associate Judge Bell appears to have analysed South Australian law, the conservative approach he adopted in Air Tahiti Nui was correct.

Upcoming events

Just a brief announcement about a couple of upcoming conflicts-related events:

On 13 February, Professor Jürgen Basedow (Max Planck Institute for Comparative and International Private Law, Hamburg) will give a public lecture at VUW Law School offering a European perspective on the legal challenges posed by Brexit. This will be followed by a response from a common law perspective, by Professor Mary Keyes (Griffith University, Queensland). See here for details.

On 15 February, the Supreme Court will hear argument in Eilenberg v Gutierrez SC 78/2017, concerning the court’s jurisdiction to enforce foreign maintenance judgments. The Court of Appeal ([2017] NZFLR 471, [2017] NZCA 270) found that pt 8 of the Family Proceedings Act 1980 does not exclude the Court’s inherent jurisdiction to enforce arrears owing under foreign maintenance judgments at common law: see Jack Wass [2017] NZLJ 410 for analysis of the Court of Appeal’s decision. On 26 September 2017, the Supreme Court gave leave to appeal on this question, and on the question of whether enforcement of the Mexican judgment would be contrary to public policy (which had not been considered by the Court of Appeal).

Cross-border regulation of access to data: Microsoft Corp v US

The cross-border regulation of electronic data throws up many conflict of laws-related problems. Microsoft Corp v United States (“the Microsoft Ireland case”), a case pending before the US Supreme Court, is a recent example of such a problem and may have implications for data stored by US companies in New Zealand. The question to be decided is whether a warrant issued under the Stored Communications Act of 1986 (US) applies extra-territorially to data that is held by Microsoft overseas. Microsoft argues, inter alia, that extraterritorial warrants to produce data stored overseas may expose companies to conflicting legal obligations if the place of storage prohibits companies from disclosing the data.

The New Zealand Privacy Commissioner filed an amicus brief in the proceeding, arguing that the extraterritorial application of the Act should reflect the importance of comity, the presumption of territoriality and “the responsibility of each country to assert and respect the rights of those within its jurisdiction”. The brief notes that application of the Act to data held in New Zealand could entail civil and criminal liability under New Zealand law, and emphasises “the prerogative of each country – large or small – to apply its own law, including fundamental protections for the rights of its own citizens, to information within its own jurisdiction”.

Some of these concerns are now reflected in a new Bill, the Clarifying Lawful Overseas Use of Data (CLOUD) Act, which would provide a direct answer to the Microsoft Ireland case. For commentary on the Bill, see this post by Jennifer Daskal on Just Security (and see here for her earlier analysis of the conflict of laws issues).

The Supreme Court’s decision in Brown v New Zealand Basing Ltd: comments on the majority judgment

by Maria Hook (University of Otago)

The Supreme Court of New Zealand recently released its decision in Brown v New Zealand Basing Ltd [2017] NZSC 139, determining whether age discrimination provisions in New Zealand employment legislation applied to Cathay Pacific pilots based in Auckland. The employment contract, expressed to be governed by the law of Hong Kong, provided for a mandatory retirement age of 55. Pursuant to the Employment Relations Ac 2000 (NZ), however, the pilots could not be required to retire until they had reached the age of 65. The pilots brought a personal grievance claim against their employer, a Hong Kong based subsidiary of Cathay Pacific, in reliance on the Act.

As many readers will be aware, this is not the first time that the cross-border effect of the airline’s retirement age provisions has been the subject of litigation. In Lawson v Serco Ltd (Crofts) [2006] UKHL 3, [2006] 1 All ER 823, the House of Lords held that the right not to be unfairly dismissed  under the Employment Rights Act 1996 (UK) applied to UK-based pilots of Cathay Pacific. But unlike the UK Act, the New Zealand Act does not contain an equivalent to s 204(1), which provides that it is immaterial for the purposes of the Act “whether the law which (apart from this Act) governs any person’s employment is the law of the United Kingdom … or not”.

The Court held unanimously that the Act applied to the plaintiffs’ claim. A copy of the judgment is available here. In this post I would like to offer some comments on the majority’s reasons, which are concise, to say the least (running to just over 15 paragraphs).

The majority judgment

The majority considered that the question was one of statutory interpretation. The reason for this was “the sui generis nature of employment law” (at [77]), as recognised in the Act. Crofts was said to support this approach. The Court considered that Lord Hoffmann had taken a statutory interpretation approach to determining the territorial limits of the UK Act (at [79]), and that he had done so because of his “view of the nature of the employment relationship in law” (at [84]). The UK Act applied to pilots based within the jurisdiction. Section 204 of the UK Act was, on this approach, irrelevant (as were the choice of law clause and the Rome Convention).

There was also nothing in the New Zealand Act to suggest that the approach taken in Crofts was excluded in relation to its anti-discrimination provisions (at [86]). On the contrary, Parliament had given consideration to the extent of the territorial application of the Act, in the form of certain exceptions to the right to be free from unlawful discrimination (contained in ss 24 and 26 of the Human Rights Act 1993). These exceptions, which related to crews of ships and aircraft and work performed outside of New Zealand, did not catch the New Zealand-based pilots (at [88] and [89]). Section 238, a no-contracting out provision, reinforced this position (at [90]). Against this background, the majority considered that “it would be very odd to construe the 2000 Act to allow discrimination in the employment context in relation to persons in the [pilots’] position, solely on the basis of the parties’ choice of law” (at [91]).

Comments

There are a number of reasons why this analysis, in my view, is unpersuasive. First, it is not obvious why the sui generis nature of employment relationships in itself should justify resort to statutory interpretation (as opposed to conflict of laws methodology). If the issue in question cannot be characterised as a contractual matter, and hence does not squarely fall within existing choice of law rules, then arguably it is the court’s task to identify an appropriate choice of law rule: see Raiffeisen Zentralbank Österreich AG v Five Star General Trading LLC [2001] QB 825 (CA). In fact, insofar as personal grievance claims are concerned, the issue may be one of subject-matter jurisdiction rather than (bilateral) choice of law: see M Hook “The ‘statutist trap’ and subject-matter jurisdiction” (2017) 13 Journal of Private International Law 435. And if there is a concern that the issue touches on non-derogable matters of policy, the court should inquire whether New Zealand law has overriding mandatory effect and, hence, whether it operates as an exception to the ordinary choice of law process (see Dixon J in The Wanganui-Rangitikei Electric Power Board v The Australian Mutual Provident Society (1934) 50 CLR 581 at 601; Dicey, Morris and Collins on the Conflict of Laws (15 ed, Sweet & Maxwell, 2012) at [1-040]). This is not the same as saying that the issue is “sui generis”.

In other words, it would have been useful for the Court to frame its reasoning in terms of orthodox conflict of laws methodology (or else justify its departure from it, beyond a vague reference to employment relationships being “sui generis”). At the very least, the Court should have referred to its previous proposition that conflict of laws methodology extends to statutory issues (Ludgater Holdings Ltd v Gerling Australia Insurance Co Pty Ltd [2010] NZSC 49, [2010] 3 NZLR 713  at [24] and [33]). It is true that some conflicts scholars have disagreed with this proposition and consider the cross-border application of statutes to be a matter of interpretation (see, eg, A Briggs, “A Note on the Application of the Statute Law of Singapore” [2005] Singapore Journal of Legal Studies 189) – but again, the Court should have engaged openly with this difference in view, rather than rely on statutory interpretation as the implicit default (see fn 84).

The Court’s reference to Crofts does not shed any more light on the matter, given the decision is widely read as proceeding on the assumption that s 204 conferred overriding mandatory effect on the UK Act (see Dicey, Morris and Collins at [1-057]; L Merrett Employment Contracts in Private International Law (OUP, 2011), Ch 7). Conversely, it would be difficult to interpret the majority’s reasoning along similar lines – ie as an application of an overriding mandatory rule – given its view that s 204 did not play a crucial role in Crofts (see also the references in fn 84). For the majority, Crofts was simply authority for the proposition that employment relationships are sui generis, that the territorial scope of employment legislation is a matter of construction and (apparently) that the territorial scope includes pilots whose home base is within the jurisdiction (at [78]).

Second, the Court found support in the territorial exceptions in ss 24 and 26, treating them as evidence that Parliament had turned its mind to the territorial scope of the anti-discrimination provisions. These exceptions may offer broader clues on the cross-border application of the rights involved. But not for the reason apparently relied upon by the Court, which was that there was therefore nothing in the legislative scheme to exclude the Crofts approach for cases not falling within the exceptions.

Section 24 excludes the right to be free from discrimination from employment of “a person on a ship or aircraft, not being a New Zealand ship or aircraft, if the person employed or seeking employment was engaged or applied for it outside New Zealand”; section 26 allows discrimination “if the duties of the position in respect of which that treatment is accorded (a) are to be performed wholly or mainly outside New Zealand and (b) are such that, because of the laws, customs, or practices of the country in which those duties are to be performed, they are ordinarily carried out only by a person who is of a particular sex or religious or ethical belief, or who is in a particular age group”.

It is obvious that Parliament did turn its mind to the cross-border application of the Act in these sections. But this should not be construed as an implicit endorsement of the base test for cases falling outside of the exclusions. Why would Parliament provide for clear territorial exclusions in ss 24 and 26 but then leave the overall delimitation of rights for judges to work out (by way of statutory interpretation)? It is more likely that Parliament meant these provisions to be self-limiting: see further Hook (above) at 439. In other words, Parliament intended that the exclusions would take effect once New Zealand law had been determined to be applicable pursuant to ordinary conflict of laws rules. So ironically, the sections may offer support for the view that personal grievance claims for discrimination are subject to external limitations (in the form of conflict of laws rules).

(That ss 24 and 26 on their own are insufficient to delimit the right to be free from discrimination is obvious. Clearly New Zealand’s anti-discrimination provisions cannot apply in all cases that do not fall within ss 24 and 26. This approach would be over-inclusive and would lead to potentially absurd results. It would mean, for example, that a person (who is not working on a ship or aircraft) can bring a personal grievance claim for discrimination under the Act even if the relevant duties are duties to be performed wholly or mainly outside New Zealand, as long as the duties are not such that, because of the laws and customs of the country, they are ordinarily carried out only by a person who is in a particular age group.) So some limitation is needed, but contrary to the Court’s reasoning, this limitation is to be found in conflict of laws rules and not statutory interpretation.)

Third, the Court’s reference to s 238 is problematic. Section 238 provides that “[t]he provisions of [the Act] have effect despite any provision to the contrary in any contract or agreement”. The better view is that contracting out provisions of this nature do not apply to choice of law agreements (and that Parliament only intended this to be a domestic non-evasion rule): for an elaboration of this point in relation to s 238, see M Hook & J Wass “The Employment Relations Act and its effect on contracts governed by foreign law” [2017] NZLJ 80. But the Court’s reliance on s 238 also seems to run counter to its overall proposition. If s 238 “makes explicit the proposition … that the parties’ choice of law provision is irrelevant” (at [90]), would that not suggest that Parliament presumed the Act to be subject to ordinary conflict of laws rules (but sought to exclude party choice)?

In its final paragraph, the Court noted that it would be “very odd to construe the 2000 Act to allow discrimination in the employment context in relation to persons in the [pilots’] position, solely on the basis of the parties’ choice of law” (at [91]). With all due respect, this statement does not capture the breadth of the Court’s own reasoning. The Act’s personal grievance provisions applied because they were not considered to be subject to ordinary conflict of laws rules. The determining consideration was not that it was a choice of law clause – as opposed to choice of law rules in the absence of agreement – that was said to lead to Hong Kong law being applicable. Contrary to the Court’s suggestion, this conclusion was by no means an obvious one to reach.