Neutral Citation Number: [2003] EWCA Civ. 1156
ON APPEAL FROM CHANCERY DIVISION
MR JUSTICE NEUBERGER
Royal Courts of Justice
Strand,
London, WC2A 2LL
Before :
LORD JUSTICE ALDOUS
LORD JUSTICE MANCE
and
LORD JUSTICE LATHAM
Between :
(1) PEER INTERNATIONAL CORPORATION (2) SOUTHERN MUSIC PUBLISHING COMPANY INC (3) PEERMUSIC (UK) LIMITED | Claimant/ Respondents |
- and - | |
(1) TERMIDOR MUSIC PUBLISHERS LIMITED (2) TERMIDOR MUSIKVERLAG GMBH & CO KG -and- | Defendants |
EDITORIA MUSICAL DE CUBA | Part 20 Defendant/ Appellant |
(Transcript of the Handed Down Judgment of
Smith Bernal Wordwave Limited, 190 Fleet Street
London EC4A 2AG
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Mr Christopher Greenwood QC and Mr James Mellor (instructed by Teacher Stern Selby) for the Appellant
Mr David Lloyd Jones QC and Mr Pushpinder Saini (instructed by Sheridans) for the Respondents
Judgment
As Approved by the Court
Crown Copyright ©
Lord Justice Aldous:
In his judgment of 11th December 2002 Neuberger J answered preliminary questions in favour of Peer International Corporation, Southern Music Publishing Company Inc. and Peer Music (UK) Limited. They form part of the Peer group of companies whose parent is Peer International Corporation. There is no need to differentiate between them and I will refer to them as Peer.
In these proceedings Peer sought declarations that they were the owners, alternatively exclusive licensees, of the United Kingdom copyright in respect of certain musical works composed by Cuban nationals. They allege that their rights stem from assignments in writing by the composers and in some instances by their heirs.
The defendants Termidor Music Publishers Ltd and Termidor Musikverlag GmBH & Co KG are part of a German publishing group. They claim to be the exclusive licensees of the copyright in the works pursuant to a licence granted by Editora Musical de Cuba (EMC). EMC is a Cuban entity which claims to own the copyrights in dispute. They were added as Part 20 defendants. They alone appeal against the order of the judge.
Essentially these proceedings are a dispute about the ownership of the United Kingdom copyright in certain Cuban musical works. Peer’s claim to ownership depends upon agreements made between the 1930s and the 1950s with the Cuban composers and documents signed in about 1989 or 1990 consisting of “Confirmations” and “Addenda”, conveniently referred to as the “Confirmation of rights” documents. EMC’s title depends upon the operation of Cuban Law 860 which was passed in 1960.
By an order made on 28th October 2002, Park J ordered that there should be a trial of three preliminary issues. Those issues together with the answers given by the judge were as follows:
Question 1– whether the assignments of copyright relied upon by the claimants were initially valid under the relevant applicable law (without prejudging what such law is) using the following agreements for the purpose of the trial of these issues:
(a) the contract dated 10th December 1936 signed by Antonio Fernandez Ortiz …;
(b) the contract dated 20th June 1940 signed by Antonio Fernandez Ortiz …;
(c) the contract dated 10th October 1930 signed by Ignacio Pineiro …;
(d) the contract dated 12th August 1933 signed by Ignacio Pineiro …;
(e) the contract dated 28th February 1945 signed by Ignacio Pineiro …;
Answer – “The initial agreements were effective to transfer title to the English copyrights in the works to which they extended, subject to the proviso to section 5(2) of the 1911 Act. Consequently, they vested the English copyright in issue in these proceedings in Peer.”
Question 2 - The effect of Cuban Law 860 on the above assignment (assuming initial validity), and whether this provision is to be given effect in English law.
Answer – “Law 860 was ineffective to deprive Peer of any such copyrights vested in it.”
Question 3 – whether the “Confirmation of rights” documents obtained by the claimants are valid assignments or exclusive licensees of the 1911 Act reversionary copyright under the relevant applicable law (without prejudging what such law is) and using the documents dated 25th August 1998 and 1st July 2002 relating to Antonio Fernandez Ortiz and documents dated 20th August 1999, 12th April 2001 and 15th April 2002 relating to Ignacio Pineiro.
Answer – “Although the Confirmations were not effective to transfer title to the reversionary copyrights vested in the heirs to the composers, they did have that effect when read together with the Addenda.
The trial of the preliminary issues was to be without prejudice to arguments based on facts relating to the circumstances of the assignments to Peer and the related transactions. Expert evidence both written and oral was adduced on Cuban law and there was also provision for written evidence to provide a matrix of fact against which issues of law in relation to Law 860 were to be resolved.
Question 1
It was common ground between the parties that, in order for an agreement to have been an effective assignment of English copyright, it must be effective to transfer the copyright according to English law and must not be invalid by its proper law. Under English law all that was needed was a written and signed agreement which on its true construction effected an assignment of the title to the copyright. It was common ground that all the agreements complied with this requirement of English law.
The judge concluded that the proper law of the first four agreements was Cuban law and that the fifth was the law of New York. No grounds were advanced to suggest that the New York agreement was not effective to transfer title to Peer.
The judge went on to consider the effect of Cuban law at the date of the agreement. He considered the relevant parts of the Cuban civil code and the expert evidence. He concluded in paragraph 41 of his judgment:
“41. … my assessment of the evidence of the two experts confirms Peer's case that there is nothing in Cuban law to invalidate the effectiveness of the Cuban agreements, so far as the assignment of the English copyright is concerned.”
The judge concluded that the agreements, were, at least on their face, valid for the purpose of transferring the title to the English copyright of the works they purported to cover from Mr Fernandez and Mr Pineiro to Peer. The sole ground of appeal against that conclusion was not pursued.
Question 2
Question 2 depends upon the effect of the Cuban Law 860 which came into effect in August 1960 after the Cuban revolution which resulted in President Castro coming to power at the beginning of 1959. As EMC rely upon what they contend is the public policy behind Law 860, it is necessary to summarise the relevant evidence before coming to its provisions.
Mr Quenedo was born in Havana in 1918. He is a composer and musician. He said in his witness statement that in the 1930s and 1940s there were groups of musicians in Havana. The problem was that the only money most of them made was small amounts for performances in Cuba. The only person seeking to exploit Cuban music was Peer and the Peer companies controlled all the music that was being exploited in Cuba and throughout the Caribbean. There were complaints of the failure of Peer to account to musicians. He had no understanding of how Peer would or could make money from music. His most pressing problem was survival as he only received a few dollars. In paragraph 17 of his witness statement he said:
“I would not say that my fellow musicians and I were completely uneducated, but none of us would have ever seen a contract of the type signed with Peer. I thought that the only period that I had agreed to be contracted to Peer was the two or three years referred to in the agreement and thereafter the contract ended and I would once again own the rights to my music absolutely. From the conversations I had with many other composers (including the Composers) signed to Peer at the time, I am completely sure that they all had the same or similar understanding.”
Mr Delgado was born in 1942. He had no first hand knowledge of the surrounding circumstances between 1930 and 1960. However he did set out the history of EMC.
“8. After the revolution in 1959, legislation prevented foreign companies such as Peer from operating within Cuba. Further, under the Castro government there became a greater awareness within Cuba as to the need to protect Cuban culture generally and control the exploitation of the copyright in Cuban music. The government therefore set about creating its own organisations to administer and control music copyright and publishing. Musicabana, which was by the late 1950’s established as the effective representatives of the Cuban musicians and composers, was ideally placed to fulfil this role and in the 1960’s Musicabana evolved into EGREM.
9. EGREM was originally created as a record company. It still operates as a record company today and has a couple of recording studios in Havana. Within EGREM however there was a separate publishing department, and from the 1960’s onwards EGREM began entering into copyright and publishing agreements with the various Cuban musicians and composers. I am aware that examples of these agreements (as relates to the Composers and the 16 tracks in these proceedings (“the Tracks”)) have been disclosed by EMC already.
10. In 1993 the publishing arm of EGREM separated and became an independent company, EMC. Under the terms of separation, EMC took over control of all EGREM’s publishing rights.”
He went on to say that:
“.. the policy behind this law [Law 860] was to re-exert Cuban control over intellectual property rights owned by Cuban nationals and prevent further exploitation of these rights by foreign companies. It is widely understood that the reason why the Castro regime felt that such control was necessary was primarily as a result of the activities of Peer.”
Peer did not provide a witness statement as to the factual position in Cuba prior to 1960. Their witness explained in general terms how the works were exploited, and the effect of the embargo placed by the USA in 1963 upon payments to composers. The result was that royalties were paid into an escrow account until the embargo was lifted. We were told that about $2.5 million dollars has now been paid.
Law 860 has five recitals. The first states that Cuba is one of the countries with the widest production of music both nationally and overseas. It is said “that the class of intellectual worker is exploited and frustrated in their most legitimate interests by virtue of the lack of suitable legislation to protect this type of human endeavour.”
Law 860 goes on to set up a Cuban Musical Rights Institute to collect royalties, to protect the rights of authors and to do such things as fixing tariffs for use. The Governing Board of the Institute has under Article 16 to “approve the agreements signed between authors or composers and publishers … without the approval of which they will be null and void and valueless for all legal purposes.” Articles 26 and 27 provide respectively for the split of royalties between the Institute and composers for performances in Cuba and overseas. Article 31 requires that all publication contracts should be submitted for approval and Article 32 lists the types of contracts which are forbidden. It is in these terms:
“ARTICLE 32. Any contract containing any of the following pacts or conditions is forbidden and, therefore, will not be approved by the Governing Board nor recorded in the contracts register of the Cuban Musical Rights Institute:
When the author or composer cedes his future production.
When the rights of administration or the economic return of one or more musical works or musical dramas are ceded without a fixed term or for a term of more than ten years.
When the contracts contain the possibility of being extended and such extensions, added to the original term, exceed ten years.”
The transitional provisions are contained in Chapter VIII. Decree 10 of that Chapter states:
“TEN: Contracts signed between authors and composers of music or musical dramas and publishers, prior to this ACT’s coming into force, should be presented within sixty days to the Cuban Musical Right Institute for the approval required. Those agreements that have not been presented or that do not warrant approval will be considered as having forfeited all rights of the Publishers, and the authors and composers will be free to sign other contracts to cover the works previously covered by such (former) contracts.”
Peer did not seek approval under Decree 10. They say that approval would not have been given, and EMC say that that conclusion cannot be drawn. However the parties agree that the effect of Decree 10 is extra-territorial and that under Cuban law it has the effect of divesting Peer of all their UK copyright in the compositions in dispute. Further there is no dispute that compensation was not payable or paid.
The judge did not consider whether Law 860 was confiscatory in nature although it appears that Peer argued that it was and EMC argued to the contrary, basing themselves upon the failure by Peer to seek the approval of the Institute. The judge concluded that Law 860 was wholly ineffective to divest Peer of the copyright because it offended against the lex situs rule as stated in Rule 120 of Dicey & Morris.
“A governmental act affecting any private proprietary right in any moveable or immovable thing will be recognised as valid and effective in England if the Act was valid and effective by the law of the country where the thing was situated (lex situs) at the moment when the act takes effect, and not otherwise.”
The judge reviewed the authorities and concluded that Rule 120 was sound as a matter of principle. He rejected EMC’s submissions that the rule should be qualified in the circumstances of this case where, as alleged by EMC, public policy and comity indicated that the applicable law to be applied was that of Cuba.
I believe that the judge came to the right conclusion for the right reasons. But as the appeal was fully argued by Mr Greenwood QC and Mr Mellor who appeared for EMC, I will give my reasons for rejecting it.
Mr Greenwood placed considerable emphasis upon the background to Law 860. The assignments to Peer were, he submitted, manifestly inequitable and oppressive and would have been void or unenforceable on grounds of English public policy (see A. Schroeder Music Publishing Co. Ltd v Macaulay [1974] 1 WLR 1308). In particular the agreements contained no obligation on Peer to exploit the copyright despite the complete transfer of rights, no power was given to the composers to assign their rights or recover their copyright despite the minimal consideration paid, and the assignments were not limited in term.
Mr Greenwood submitted that Law 860 was not confiscatory in nature. It was intended to regulate the contractual relationships between composers and publishing companies so as to ensure that the music industry did not take unfair advantage of composers who were frequently unsophisticated. He submitted that Law 860 was entirely consonant with English and international concepts of public policy. It was an enactment which redressed contractual imbalance.
The question of whether the agreements would have been enforceable according to English law upon grounds of public policy was not in issue because that did not arise on the preliminary questions. Further four of the agreements were governed by Cuban law and the other was governed by the law of New York and the parties did not provide the relevant evidence on that matter. However I am prepared to assume that the agreements would have been held to be unenforceable as being in restraint of trade if they had been governed by English law. But I reject the submission that Law 860 was purely an instrument of contractual regulation. It was legislation which controlled the exploitation of intellectual property rights. In the circumstances of this case it had the effect of divesting Peer of their copyright in certain Cuban compositions. As such it had and was intended to have extraterritorial effect upon property situated in the United Kingdom.
Mr Greenwood split Rule 120 of Dicey and Morris into two facets. First, United Kingdom courts would recognise as valid and effective governmental acts relating to property situated outside that jurisdiction if the law of the state where the property is sited does so. Second United Kingdom courts will not recognise a governmental act affecting property situated in the United Kingdom. However those facets are, he submitted, subject to qualification particularly where considerations of comity and public policy so required. An instance of such a qualification of the first facet arose in Kuwait Airways Corp v Iraqi Airways Co (Nos 4 and 5) [2002] UKHL 19; [2002] 2 AC 883. The facts of that case are well known. In August 1990 Iraq invaded Kuwait and subsequently the Iraqi Government directed the defendant to fly ten of the claimant’s aircraft to Iraq. Thereafter the defendant treated the aircraft as its own. The claimant subsequently claimed delivery up of the aircraft that remained in existence and damages. The House of Lords, dismissing the appeal, held that it was legitimate for an English court to have regard to international law in deciding whether to recognise a provision of foreign law. In the circumstances of that case recognition should not be given to Iraqi law and therefore the defendants were liable under English law for tortious conversion. The basis of the reasoning was stated by Lord Nicholls at page 1028:
“15 Conflict of laws jurisprudence is concerned essentially with the just disposal of proceedings having a foreign element. The jurisprudence is founded on the recognition that in proceedings having connections with more than one country an issue brought before a court in one country may be more appropriately decided by reference to the laws of another country even though those laws are different from the law of the forum court. The laws of the other country may have adopted solutions, or even basic principles, rejected by the law of the forum country. These differences do not in themselves furnish reason why the forum court should decline to apply the foreign law. On the contrary, the existence of differences is the very reason why it may be appropriate for the forum court to have recourse to the foreign law. If the laws of all countries were uniform there would be no "conflict" of laws.
16 This, overwhelmingly, is the normal position. But, as noted by Scarman J in In the Estate of Fuld, decd (No 3) [1968] P 675, 698, blind adherence to foreign law can never be required of an English court. Exceptionally and rarely, a provision of foreign law will be disregarded when it would lead to a result wholly alien to fundamental requirements of justice as administered by an English court. A result of this character would not be acceptable to an English court. In the conventional phraseology, such a result would be contrary to public policy. Then the court will decline to enforce or recognise the foreign decree to whatever extent is required in the circumstances.
17 This public policy principle eludes more precise definition. Its flavour is captured by the much repeated words of Judge Cardozo that the court will exclude the foreign decree only when it "would violate some fundamental principle of justice, some prevalent conception of good morals, some deep-rooted tradition of the common weal": see Loucks v Standard Oil Co of New York (1918) 120 NE 198, 202.
18 Despite its lack of precision, this exception to the normal rule is well established in English law. This imprecision, even vagueness, does not invalidate the principle. Indeed, a similar principle is a common feature of all systems of conflicts of laws. The leading example in this country, always cited in this context, is the 1941 decree of the National Socialist Government of Germany depriving Jewish émigrés of their German nationality and, consequentially, leading to the confiscation of their property. Surely Lord Cross of Chelsea was indubitably right when he said that a racially discriminatory and confiscatory law of this sort was so grave an infringement of human rights that the courts of this country ought to refuse to recognise it as a law at all: Oppenheimer v Cattermole [1976] AC 249, 227-278. When deciding an issue by reference to foreign law, the courts of this country must have a residual power, to be exercised exceptionally and with the greatest circumspection, to disregard a provision in the foreign law
when to do otherwise would affront basic principles of justice and fairness which the courts seek to apply in the administration of justice in this country. Gross infringements of human rights are one instance, and an important instance, of such a provision. But the principle cannot be confined to one particular category of unacceptable laws. That would be neither sensible nor logical. Laws may be fundamentally unacceptable for reasons other than human rights violations.”
Mr Greenwood submitted that in the Kuwait Airways case the courts had refused to give effect to the foreign law because of considerations of public policy. It would therefore not be surprising that the second facet of Rule 120 in Dicey and Morris was not absolute where the act of the foreign state was benevolent, as was Law 860, and that its policy was in accordance with United Kingdom public policy considerations.
I accept that the decision in the Kuwait Airways case was an exception to the first facet of Rule 120, but Dicey and Morris makes clear that there are such exceptions. It does not follow that there are also exceptions to the second facet.
In support of his submission, Mr Greenwood relied on the judgment of Atkinson J in Lorentzen v Lydden [1942] KB 202 which was followed by Morris J in O/Y Wassa SS Co Ltd v Newspaper Pulp and Wood Export Ltd [1949] 82 L1.L Rep 936.
In Lorentzen, the Norwegian Government in Norway decreed that all ships registered in Norway were requisitioned. The defendants, a firm carrying on business in London had agreed to charter a Norwegian vessel for the carriage of pulp from Oslo to Grangemouth or Leith. The curator sued for damages, alleging that the defendants had repudiated the contract. The defendants contended that the site of the debt was England and that by English law the Norwegian decree did not pass ownership of that debt. Having reviewed the authorities, Atkinson J said at page 215:
“It seems to me that the English courts are entitled to take into consideration the following matters: that this is not a confiscatory decree, see art. 5 of the decree, that England and Norway are engaged together in a desperate war for their existence, and that public policy demands that effect should be given to this decree. To suggest that the English courts have no power to give effect to a decree making over to the Norwegian Government ships under construction in this country seems to me to be almost shocking. At any rate; following that judgment and the judgments referred to therein I am entitled to give effect to this decree. It is not confiscatory, it is in the interests of public policy, and it is in accordance with the comity of nations. Therefore I determine this issue in favour of the plaintiff.”
In my view the Lorentzen case was wrongly decided. It is contrary to the overwhelming statement of judicial opinion, supported by those that have written on the subject to which I will refer. It is also contrary to public policy.
The El Condado [1939] 63 L1.L Rep 330, a decision of the Court of Session, was not referred to in the judgment of Atkinson J in the Lorentzen case. The facts can be distinguished, but statements as to the law are relevant and important. Lord Aitchison said at page 333:
“The penal laws of foreign countries are strictly local, and affect nothing more than they can reach and can be seized by virtue of their authority; a fugitive who passes hither, comes with all his transitory rights; he may recover money held for his use, stock, obligations and the like; and cannot be affected in this country, by proceedings against him in that which he has left, beyond the limits of which such proceedings do not extend.
Does that rule apply equally to legislation which is not confiscatory or penal in the full sense, but the effect of which is to subject the owner of moveable property in his use and control of that property, to the overriding control of the State where, as in this case, the property is requisitioned by the State for public purposes? There is no direct authority upon the point. The nearest case is perhaps the Jupiter (No. 3), [1927] P. 122. It was there held that the nationalisation decrees of the Union of Socialist Soviet Republics did not operate on moveable property outside the territory of the Republic, whether such property belonged to a Russian citizen or not. It was a fact in that case that the Jupiter was not at the date when the decrees were promulgated within Russian territory. In this case it is expressly conceded that at the date of the requisition the El Condado was not within Spanish territorial waters and she was in the port of Greenock when the de facto possession was taken. In the Jupiter, Hill, J., pointed out that no distinction could be drawn between ships and other chattels and that the same principles were applicable to both, and he reached the conclusion that the decree of nationalisation was ineffectual to transfer the property in the ship, which was not within the jurisdiction at the date of the decree. His judgment both as regards fact and law was affirmed by the Court of Appeal.
The case is not on all fours, but in my opinion the principle of Hill J.'s, judgment applies to the present case. The test to be applied is this: Supposing the Spanish Consul, instead of taking possession of the El Condado brevi manu, had sued the owners in the Courts for the delivery of the ship, could the action have succeeded? I am satisfied it could not. It could no more have succeeded than an action for recovery of moneys belonging to the Spanish owners in a bank in this country and requisitioned for the temporary use of the Spanish Government to finance the war. The conclusive answer would be that it was moveable property that was outwith the territory and jurisdiction of the foreign Sovereign State, and having been so at the date of the decree, it was not capable of being affected by the requisition. That is the ground of the Lord Ordinary's judgment, and in my opinion he was right in dismissing the action, because if no wrong was committed by the owners of the ship in respect that the Spanish Government had no lawful possession of her, notwithstanding that they could not be impleaded, no liability can attach to the defenders under their bond of caution.”
Lord Mackay said at page 338:
“The question of extra-territoriality arises doubly. It is for us a question to be decided on Scots law (in the absence of any averment of a differing Spanish law) whether we are to hold that a decree of a de jure Government (issued in Barcelona or Madrid) can have extra-territorial effect upon (a) a ship situated in our harbours and (b) registered and belonging to a company domiciled under General Franco's de facto Government's jurisdiction.
I am of opinion that such extraterritorial validity is not recognised by Scots law. The sealed document exhibited in the former case and lying before us bears in its terms to have "requisitioned" all ships of certain registration. That means, in my opinion, by Scots law, that a requisition of full property was intended in the full sense of the word "requisition" as so well known to our Courts during the years 1914 to 1918.
I am prepared to hold, therefore, that the pretended title of the pursuers was, in fact and in law bad; and that the original owner's right of ownership was never lost or adversely affected. Hence, no judicial wrong was ever done to the pursuers. I agree on these fuller grounds with the results of the Lord Ordinary, and I agree we should adhere to his judgment.”
Lord Pitman said at page 339:
“Requisition is not a legal method in this country of transferring property or rights of user of property, except at the instance of the Crown. It is the prerogative of the Crown in times of imminent national danger to take any steps necessary to secure the defence of the realm, and in 1914 by virtue of that power regulations were made by His Majesty in Council providing (inter alia) for the requisitioning of ships by the competent naval authority. It would be strange, indeed, if a foreign State were allowed to exercise similar powers and by its officials take forcible possession of property requisitioned.”
Lord Wark said at page 341:
“This means further that they must show that the decree of law enacted on June 28, 1937, was valid and effectual according to the law of the forum to which they applied, namely, Scotland, to entitle them to the possession and control of a ship lying in a Scottish port, and which admittedly at the date of the decree and continuously thereafter had been outwith Spanish territory and territorial waters. I say "according to the law of the forum," because they make no averments of Spanish law on that matter.
I agree with the Lord Ordinary and with your Lordships that the decree is of no effect outwith Spanish territory and territorial waters, and gave the pursuers no right to requisition the El Condado or to take forcible possession of her as they did. On such a matter as this there is no difference between the law of England and the law of Scotland, and the decisions of the English Courts to which the Lord Ordinary refers, especially the case of the Jupiter (No. 3), [1927] P. 122 and 250, appear to me to be sufficient authority to support his decision. I refer to the judgment of Hill, J., at pp. 138 and 144, and of Atkin, L.J., and Lawrence, L.J., in the Court of Appeal at p. 255. It is true that that case dealt with the question of transfer of property, but the ratio upon which it proceeds is that the decree of a foreign Government has no effect whatever upon moveable property, including ships, outwith the territory. This doctrine rests upon the principle that jurisdiction is limited by effectiveness. It is recognised in several recent cases, notably in Sedgwick, Collins & Co. v. Rossia Insurance Company of Petrograd [1926] 1 K.B. 1, by Sargant, L.J., at p. 15, and by the Lord Chancellor in that case in the House of Lords, [1927] A.C. 95, at p. 102, and in Russian Commercial and Industrial Commercial and Industrial Bank v. Comptoir d’Escompte de Mulhouse, &c. [1925] A.C. 112, by Lord Chancellor Cave at p. 125, and Viscount Finlay at p. 137. "A State's authority," says Professor Dicey in his Introduction to his treatise on the Conflict of Laws, 5th ed., at p. 20, in the eyes of other States and the Courts that represent them is speaking very generally, coincident with, and limited by, its power. It is territorial. It may legislate for, and give judgments affecting, things and persons within its territory. It has no authority to legislate for, or adjudicate upon, things or persons (unless they are its subjects) not within its territory.”
There followed in 1947 Frankfurther v W.L. Exner Ltd [1947] 1 Ch 629, a case where Romer J refused to give effect to an Austrian decree extending to moveables situated in this country because it was penal in nature. To similar effect was Novello & Co. Ltd v Hinrichsen Editions Ltd [1951] 1 Ch 595. Because the legislation was confiscatory, those cases can be distinguished.
In 1951, Devlin J gave judgment in Bank Voor Handel En Scheepvaart NV v Slatford [1953] 1 QB 248. In that case a Dutch bank deposited a quantity of gold in London before the start of the 1939-1945 war. In May 1940 the Netherlands were invaded and they became an enemy territory for the purposes of the Trading With The Enemy Act 1939. The Royal Netherlands Government, with the approval of the UK Government, exercised their powers from London and in May 1940 they issued a decree which purported to have the effect of transferring property, including the gold, to the Netherlands Government (the A.1 decree). In July 1940, the Board of Trade made a vesting order transferring the gold to the Custodian of Enemy Property. He sold it for £2 million. In May 1950 the Netherlands Government made an order returning the property in the gold to the Bank. The Bank then claimed against the Custodian in conversion for the present value of the gold. Devlin J held that the A.1 decree was ineffective to transfer moveable property in this country. At page 257 he said:
“I think it is convenient to begin by considering what is the general principle of our law with regard to foreign legislation affecting property within our territory. There is little doubt that it is the lex situs which as a general rule governs the transfer of movables when effected contractually. The maxim mobilia sequuntur personam is the exception rather than the rule, and is probably to be confined to certain special classes of general assignments such as marriage settlements and devolutions on death and bankruptcy. Upon this basis the A.1 decree, not being a part of English law, would not transfer the property in this case. But decrees of this character have received in the authorities rather different treatment. Although there is not, as far as I am aware, any authority which distinguishes general legislation, such as part of a civil code, from ad hoc decrees, the effectiveness of such decrees does not appear on the authorities to be determined exclusively by the application of the lex situs. Apart from two recent cases on which the plaintiffs greatly rely, there has been no case in which such a decree has been enforced in this country, but the grounds for refusing effect to them have been variously put. Sometimes it is said that the decree is confiscatory. In the textbooks it is said sometimes that as a matter of public international law no State ought to seek to exercise sovereignty over property outside its own territory, and therefore the principle of comity is against enforcement; and sometimes it is said that the principle of effectiveness is against enforcement, since no State can expect to make its laws effective in the territory of another State. Dicey, Conflict of Laws, 6th ed., p. 13, states: "A State's authority, in the eyes of other States and the courts that represent them, is, speaking very generally, coincident with, and limited by, its power. It is territorial. It may legislate for, and give judgments affecting, things and persons within its territory. It has no authority to legislate for, or adjudicate upon, things or persons not within its territory."
The Solicitor-General has argued on principle that no foreign legislation, whether confiscatory or not, can be allowed to affect property in this country. It is beyond dispute that confiscatory legislation will not be allowed to do so, and the Solicitor-General contends that the distinction between confiscatory and non-confiscatory is not a satisfactory one. …
There are other considerations of principle which can be advanced in support of the defendants' argument. First, in the construction of our own statutory legislation we accept the principle that, unless the contrary is made clear, an Act of Parliament is not intended to have extraterritorial effect. Secondly, the principle as submitted by the defendants is in harmony with the principle which favours the lex situs generally. Thirdly, if extraterritorial effect is given to foreign property legislation, it can only be at the expense of English law affecting the same subject-matter.
This seems to me a point worth detailed consideration. The plaintiffs do not suggest that such legislation could override the express provisions of an Act of Parliament. But while it is easy to concede that some limits would have to be imposed, it is not so easy to define what they should be. No foreign legislation could have any effect at all unless the common law, by which ordinarily rights of property are governed, was subordinated to it. I know of no authority for distinguishing in this respect between the common law and statute. Some codifying statutes are merely declaratory of the common law. Moreover, a statute can be affected although its provisions are not expressly overridden. In Rex v. Paddington and St. Marylebone Rent Tribunal, Ex parte Bedrock Investments Ld., and Rex v. Fulham and Kensington Rent Tribunal, Ex parte Marks, if I may pick out a recent example of this, the Furnished Houses (Rent Control) Act, 1946, was said to "affect" the Rent Acts because they interfered with the scheme of control which the latter Acts set up.
For an example of the sort of interference of this type which foreign legislation might cause, it is unnecessary to go further than the present case. On May 20, 1940, the plaintiffs' gold became subject to the control imposed by the Trading with the Enemy Act. A vesting order might be made whenever the Board of Trade thought fit; and meanwhile article 4 of the Trading with the Enemy (Custodian) Order, 1939, provided: "No person shall, without the consent of the Board of Trade, save as directed by this order transfer, part with or otherwise deal with the property of any enemy." The A.1 decree unwittingly snatched the gold from under the custodian's hand.
The conflict might not always be so direct as that. At the beginning of the war all goods were made subject to requisition by the British Government. Should the courts allow that object to be defeated by the legislation of allied or neutral governments endeavouring to further their own war efforts or safeguard the property of their subjects? Could neutral legislation be allowed, for example, to nullify the prerogative right of angary? The plaintiffs submit that these problems can be solved by the application of some principle of public policy. I shall have to consider later that suggested solution; for the moment I say no more than that any rider of the "unruly horse" must feel himself very firmly in the saddle before he undertakes to drag any number of foreign decrees through the thickets of our domestic legislation.
There is one more consideration under this head. Our own statutes may sometimes conflict, but they are at least designed to fit in with each other. Foreign legislation cannot be so designed, and it will generally be founded on a basis of property law very different from our own. Our statute law has evolved rules of construction for settling differences as between instruments of equal efficacy, as, for example, generalia specialibus non derogant; but these would not help to decide how much room was to be given to subordinate legislation. In short, a principle of private international law that allows property legislation to operate in the territory of another country, so far from being a principle which resolves the conflict of laws, will create a conflict which it will require the formulation of a new system to settle. There seems to me to be every reason, if the authorities permit it, for giving effect to the simple rule that generally property in England is subject to English law and to none other.”
Devlin J went on to consider the judgment of Atkinson J in the Lorentzen case. He was unable to distinguish it, but after taking into account other authorities, in particular The El Condado, he concluded that the dicta in the English cases were sufficient to support the conclusion in the El Condado and that the rule was a sound one. He said: “If Atkinson J is to be taken as deciding that the general rule was otherwise, I respectfully prefer the decision in the El Condado.”
To that exposition of the law can be added the statements of Nourse J and Lord Templeman in Williams and Humbert Ltd v W&H Trade Marks (Jersey) Ltd [1986] 1 AC 368. At page 379 Nourse J said:
“(2B) English law will not enforce foreign laws which purport to confiscate property situated in this country: see Frankfurther v. W. L. Exner Ltd. [1947] Ch. 629 and Novello & Co. Ltd. v. Hinrichsen Edition Ltd. [1951] Ch. 595. This can now be seen to be an application of the wider rule that English law will not enforce foreign laws which purport to have extra-territorial effect: see Bank voor Handel en Scheepvaart N.V. v. Slatford [1953] 1 Q.B. 248. Thus the rule would just as much apply to expropriatory laws which provided for payment of proper compensation: see Oppenheimer v. Cattermole [1976] A.C. 249, 276, per Lord Cross of Chelsea. All these are class II laws, although the first two cases cited might now be decided on the ground that the laws there in question were class I laws falling within category (1A).”
Lord Templeman said at page 428:
“There is undoubtedly a domestic and international rule which prevents one sovereign state from changing title to property so long as that property is situate in another state. If the British government purported to acquire compulsorily the railway lines from London to Newhaven and the railway lines from Dieppe to Paris, the ownership of the railway lines situate in England would vest in the British government but the ownership of the railway lines in France would remain undisturbed. But this territorial limitation on compulsory acquisition is not relevant to the acquisition of shares in a company incorporated in the acquiring state. If the British government compulsorily acquired all the shares in a company incorporated in England which owned a railway line between Dieppe and Paris, the ownership of that railway line would remain vested in the company, subject to any exercise by a French government of power compulsorily to acquire the railway line. In the present case, the Spanish government acquired all the shares in Rumasa and Jerez. Ownership of the shares in Williams & Humbert was and remained vested in Rumasa. Ownership of any right of action to recover the Dry Sack trade mark and to recover damages was and remained vested in Williams and Humbert. Ownership of any right of action to recover $46 million was and remained vested in Jerez.”
To similar effect were statements in the speeches in Société Eram Shipping Co. Ltd v Compagnie Internationale de Navigation [2003] All ER 465. Lord Hoffman said:
“54. My Lords, so far I have been considering the matter, as almost all the authorities have done, as one of fairness and equity between the parties. But there is another dimension. The execution of a judgment is an exercise of sovereign authority. It is a seizure by the state of an asset of the judgment debtor to satisfy the creditor's claim. And it is a general principle of international law that one sovereign state should not trespass upon the authority of another, by attempting to seize assets situated within the jurisdiction of the foreign state or compelling its citizens to do acts within its boundaries.
55. In the modern world, banking is perhaps the strongest illustration of the importance of mutual respect for national sovereignties. There are nearly 500 foreign banks in London, to say nothing of British banks with branches overseas. Banking is a highly regulated activity and each head office or branch has to comply with the laws of the jurisdiction in which it operates. If the courts of one country in which a bank operates exercise no restraint about using their sovereign powers of compulsion in relation to accounts maintained with that bank at branches in other countries, conflict and chaos is likely to follow.”
Lord Millett said at paragraph 80:
“80. The near universal rule of international law is that sovereignty, both legislative and adjudicative, is territorial, that is to say it may be exercised only in relation to persons and things within the territory of the state concerned or in respect of its own nationals. But in terms of domestic law these limits are self-imposed. A sovereign legislature has power under its domestic law to disregard them and a court of "unlimited jurisdiction" (that is to say one which has power to decide the limits of its own jurisdiction) cannot be said to lack power to do so. Where the court observes the limits imposed by international law it may be a matter for debate whether it has no jurisdiction or has a jurisdiction which it refrains from exercising as a matter of principle. But it needs to be appreciated that, whether the court disclaims jurisdiction or merely declines to exercise it, it does so as a matter of principle and not of discretion.”
Dr Mann in his book ,“Further Studies in International Law” wrote:
“International jurisdiction is an aspect or an ingredient or a consequence of sovereignty ... laws extend so far as, but no further than, the sovereignty of the State which puts them into force nor does any legislator normally intend to enact laws which apply to or cover persons, facts, events or conduct outside the limits of his State's sovereignty. This is a principle or, perhaps one should say, an observation of universal application. Since every State enjoys the same degree of sovereignty, jurisdiction implies respect for the corresponding rights of other States. To put it differently, jurisdiction involves both the right to exercise it within the limits of the State's sovereignty and the duty to recognise the same right of other States.
Or, to put the same idea in positive and negative form, the State has the right to exercise jurisdiction within the limits of its sovereignty, but is not entitled to encroach upon the sovereignty of other States.”
To that should be added the views expressed in Cheshire and North’s Private International Law (13th ed. pages 122-123).
“Owing to the decision of ATKINSON J in Lorentzen v Lydden & Co, it was for some time doubtful whether an extra-territorial effect should not be attributed to the requisition, as distinct from the confiscation, of property by a foreign State. In that case, the Norwegian Government, on the eve of their escape to England in 1940 issued a decree whose effect, inter alia, was to requisition, in return for compensation, all Norwegian ships lying in harbours of the United Kingdom. Since England and Norway were engaged together in a war against Germany for their very existence, the judge took the view that the enforcement of the decree was demanded by public policy.
The position may now be regarded as settled by Bank voor Handel en Scheepvaart v. Slatford, where DEVLIN J followed an earlier Scots decision in preference to that of ATKINSON J.”
Mr Greenwood submitted that the law had evolved since the Bank voor Handel case was decided as was evidenced by the reasoning in the Kuwait Airways case. An English court can give effect to the legislation of a foreign state affecting property in the United Kingdom where that foreign state is regularising a matter of legitimate interest and the legislation accords with United Kingdom law and public policy widely accepted internationally. In the present case public policy was served by the Cuban law. Law 860 was passed to regulate contractual relations and provided a solution according to public policy, whereas a refusal to give effect to it would lead to protracted litigation.
I have already expressed the view that Law 860 had the effect of regulating property rights. Further the evidence does not establish that there is an internationally accepted view on public policy as to assignments of copyright. There is nothing in this case equivalent to that which happened in the Kuwait Airways case. In any case the submission that there should be an exception to the lex situs rule based on public policy is misguided. This was demonstrated by Mr Lloyd Jones QC in his submissions. He rightly submitted that any exception based upon public policy was wrong in principle because (1) it would subordinate English property law to that of a foreign state; (2) the rule would be founded and would operate by reference to public policy which could change from time to time and could be uncertain; (3) it would require the English courts to assess the merits of the foreign legislation; (4) it would lead to intractable problems when the property was situated in a third state; (5) it would require the court to balance one public policy against the public policy that states do not interfere with property situated abroad, and (6) it would lead to great uncertainty.
Reliance on public policy as creating an exception to the lex situs rule was considered by Devlin J in the Bank voor Handel case. I respectfully adopt what he said which applies to the facts of this case:
“The question next arises whether the A.1 decree belongs to a special category which should form an exception to this general rule. The real ground stated by Atkinson J. in Lorentzen v Lydden & Co. Ld. for regarding the Norwegian decree as exceptional is that, England and Norway being engaged together in a desperate war for their existence, public policy required that effect should be given to the decree. This reasoning at once gives rise to three comments. The first is that it amounts to the formulation of a new head of public policy, and that is not a matter to be lightly undertaken. The second is that it is using public policy, not in accordance with precedent, as a restriction upon acts which are thought to be harmful to the community, but in a novel way as a positive force to give to an act validity which it would otherwise lack. The third is that it appears to cast on the court the duty of considering to some extent the political merits of the decree itself.
…
I shall not set out the well-known authorities in which the application of rules of public policy have been considered. I shall refer only to the recent case of Monkland v. Jack Barclay Ld., partly because Asquith L.J. puts the effect of the cases in a sentence, and partly because it has some similarity with some of the novel aspects of the plea of public policy in this case. The case was concerned with a scheme promulgated by the Motor Trade Association which sought to prevent by covenant a purchaser of a new car from reselling the car within a certain period after purchase. In form public policy was relied upon negatively; it was said that any contract which did not contain a restrictive covenant as required by the scheme was void as contrary to public policy. In substance it might be regarded as an attempt to use public policy as a positive force in support of the scheme. Asquith L.J., after referring to the specific classes of contracts which had been ruled contrary to the policy of the law, said: "The courts have again and again said that, where a contract does not fit into one or other of these pigeonholes, but lies outside this charmed circle, the courts should use extreme reserve in holding such a contract to be void as against public policy, and should only do so when the contract is incontestably and on any view inimical to the public interest. ... It was suggested by Mr. Pritt that the Motor Trade Association's covenant scheme had the approval of the Government or government officials and that this was in some way relevant to the question whether a contract which departed from it was or was not contrary to public policy. It could only be so relevant if the Government's approval was some evidence that public policy called for the enforcement of the scheme. We think that this is an unfounded suggestion. What one government approves, its predecessor or successor may condemn; and, if the suggestion were acted on, precisely the same contract might have to be held void when government A was in power, and valid when government B was in power. The distinction between political policy and public policy was firmly drawn in Egerton v. Brownlow, where Lord Truro said that public policy 'has been confounded with what may be called political policy; such as whether it is politically wise to have a sinking fund or a paper circulation, or the degree and nature of interference with foreign States; with all which, as applied to the present subject, it has nothing whatever to do.' For these reasons, in our view, the defendants' point on public policy is wholly unfounded."
The distinction that is there drawn between public policy and political policy seems to me to be equally applicable here. No doubt one could formulate a broad rule of public policy that allied governments should be assisted in time of war. But the extent to which a particular decree serves that end seems to me to be entirely a matter for political decision by the Government of the day, which would have to consider whether all its provisions or some or none of them fitted in with their war policy. A power at war is not bound to regard everything that its allies do as politically desirable.”
In any case Law 860 is in my view confiscatory. It took away from Peer, without compensation, their copyright. The provision for presentation and possible approval in Decree 10 cannot affect that conclusion. That split agreements into two types, namely those that were presented and approved and those that were presented and not approved or not presented resulting in the copyright being confiscated without compensation. The later types meant that the copyright was confiscated.
Question 3
Section 5(2) of the Copyright Act 1911 permitted the owner of copyright to assign the right provided it was in writing and signed. However it contained a proviso that no assignment of the copyright (otherwise than by will) could be operative to vest in the assignee any rights beyond the expiration of 25 years from the death of the author. The reversionary interest vested in the author’s heirs and any agreement entered into by the author disposing of that reversionary interest was stated to be null and void. Paragraph 27 of Schedule 1 of the Copyright, Designs and Patents Act 1988 preserves the effect of that provision.
The third question assumes that the Confirmations of Rights were signed by the true heirs and seeks guidance as to whether they assigned the copyright that they inherited. The answer depends upon the proper construction of the Confirmations and Addenda.
The confirmations were headed “Composer Confirmation of Rights”. So far as relevant they were as follows:
“I ... do hereby confirm the authority of Peer ..., on a world wide basis, to administer and control all rights in and to the musical compositions [which are identified] authored by [the composer]. I further confirm that each of the [said] compositions are subject to a publishing agreement entered into by [the composer], and binding upon me ... and Peer ... conveying to Peer ... world wide ... a ... 100% interest, inclusive of the world wide copyright interest in and to the subject works (including all renewals, extensions and reversions of copyrights, wherever arising) under all applicable laws and treaties throughout the world, with the exception of Cuba ...
The within confirmation and authorisation shall be deemed my instruction to and shall be binding upon all licensees, and all persons, firms and corporations recording, performing or otherwise using any of the [said] works ...”
The Addenda were headed “Addendum to “Composer Confirmation of Rights””. So far as relevant they were as follows:
“You have referred us to the 'Composer Confirmation of Rights' dated ... Pursuant to proceedings you have brought in the United Kingdom to protect the musical rights acquired by Peer ... we granted you pursuant to the [said] Composer Confirmation of Rights ... you have asked us to provide you with a statement.
I confirm that the [said] Composer Confirmation of Rights ... was intended to confer upon Peer ... amongst other matters, and without limitation the exclusive license and assignment of any and all rights vested in me with respect to the United States copyright renewal and the United Kingdom reversionary rights in the compositions referred to [and therein].”
The evidence did not establish any matrix of fact. It would therefore not be right to conclude that the Confirmations were drafted and signed by the parties with English Copyright law in mind rather than say New York law.
The Confirmations are what they say they are, namely confirmations that the compositions are the subject of publishing agreements controlled and administered by Peer. The judge was therefore right to conclude that the Confirmations were not effective to transfer the copyright vested in the heirs.
The Addenda use the words “intended to confer … the exclusive licence and assignment of any and all rights vested in me with respect to … the United Kingdom reversionary rights …”. No doubt, as was submitted by EMC, the addenda did not alter the meaning of the words of the Confirmations, but they did, as between the parties, set out what they say the confirmation meant. As the judge said:
“94. … However, one is here concerned with construing two documents, which were clearly intended to have some commercial effect with regard to the title to the world wide copyrights in certain works. If the first document is somewhat unclear in its terms and does not, on analysis, appear to effect an assignment of the copyright, but the second document makes it quite clear that it was the intention of the parties that it should effect such an assignment, then it seems to me that one should read the two documents together so as to give effect to what is said in the second document to have been the intention of the parties to the first document. After all, when construing the two documents, the ultimate aim of the court is to give effect to the intention of the parties, as it appears from the documents themselves.”
I agree with the judge that the Addenda make it clear that the intention of the parties was to assign the relevant copyright to Peer. As they were in writing and signed by the heirs, those documents, when read together, were sufficient to assign the copyright.
The judge in paragraph 96 went on to express a view as to whether the assignment was effective from the date of the Confirmation or the Addendum. That issue does not arise and I express no view except that it may be difficult for the heirs to contend for a date that would be contrary to their stated views.
Conclusion
The judge was right to answer the questions as he did. The appeal should be dismissed.
Lord Justice Mance:
I agree with the judgment given by Aldous LJ on both the questions (numbers 2 and 3) which were in issue before us. I add only a few words of my own on question 2, the effect of Cuban law 860 on the assignments, assuming their initial validity, and whether it is to be given effect in English law.
This question falls to be decided according to principles stated in Bank voor Handel en Scheepvaart NV v. Slatford [1953] 1 QB 248. In that case Devlin J could say that he had had the benefit of a much fuller and more able presentation of the relevant considerations than Atkinson J had had in the unsuccessful argument to like effect in Lorentzen v. Lydden & Co. Ltd. [1942] 2 KB 202 – where Mr Patrick Devlin KC acted as counsel. However that may have been, Devlin J’s post-war reasoning and conclusions in Bank voor Handel are in my view compelling.
Without endorsing the view that in times of war laws are either silent or bend, I add that the subject matter in both those cases was very different from the present. The demands of public policy which Atkinson J considered that it would be “almost shocking” to ignore arose from the “desperate war for their existence” in which Norway and this country were allies at the times of both the Norwegian Government’s extra-territorial decree and the litigation regarding its recognition in Lorentzen. But even in relation to a similar wartime measure by the Royal Netherlands Government, Devlin J in his post-war decision in Bank voor Handel took the view at pp.263-267, with which I agree, that the courts’ perception of public policy was not an appropriate basis for recognition in this country of decrees with purported extra-territorial effect in relation to property in England. If the aims of such a decree matched those of this country, then it was open to the British Government itself to pass corresponding legislation: see Bank voor Handel, per Devlin J at p.265.
In private international law, the established connecting factor in relation to governmental acts affecting rights in movable or intangible property is the situs or location of the property: see Rule 120 in Dicey & Morris, cited by Aldous LJ at paragraph 20. Where the court is concerned with a foreign governmental act in relation to an asset within the foreign jurisdiction, public policy may constitute the reason for refusing it enforcement or recognition in this jurisdiction in rare and exceptional circumstances, such as in Kuwait Airways Corp. v. Iraqi Airways Co. (Nos. 4 and 5) [2002] UKHL 19; [2002] 2 AC 883. The legal position regarding the rights to or in such property is then whatever would be the position, apart from the law refused recognition. Public policy operates in this context as a control upon some other recognised system of law which otherwise continues to govern in accordance with the normal rules of conflicts of laws.
The present case is not, however, concerned with an act by a foreign government in relation to an asset within its jurisdiction. The copyright with which we are concerned is in this country, not in Cuba. We are asked to give positive effect to a foreign government’s act in relation to property in England; and to elevate public policy to the level of an appropriate connecting factor, using it to displace the ordinary law of copyright applicable in the English situs. This would, as Devlin J said in Bank voor Handel at pp.263-4, involve:
“using public policy, not in accordance with precedent, as a restriction upon acts which are thought to be harmful to the community, but in a novel way as a positive force to give an act validity which it would otherwise lack”.
Lord Nicholls said in the Kuwait Airways case at paragraph 15 that “Conflict of laws is concerned essentially with the just disposal of proceedings having a foreign element”, and that “in proceedings having connections with more than one country an issue brought before a court in one country may be more appropriately decided by reference to the laws of another country even though those laws are different from the law of the forum court”. No doubt, the courts should, in the light of this underlying purpose, take care to ensure that the rules which have developed continue to fulfil the requirements of justice, and to designate the appropriate governing law. But there is also an important need for stability and certainty.
There is no basis for redefining the rules of characterisation so as to treat the present issue of United Kingdom copyright as one concerning contract, rather than property. Taking the issue, therefore, as one concerning property, I see equally little basis for elevating public policy to a positive connecting factor overriding the law of the situs, even if the Cuban law is not regarded as penal or confiscatory. It would create confusion and uncertainty to do so. It is wholly unclear what would or could be the test for determining whether a foreign law should displace property rights otherwise existing under English law, in circumstances where Parliament had not enacted any legislation affecting such rights or reflecting such foreign law. It could not simply consist in an assessment by the English court that the foreign law would, if passed in an English context, accord with what Parliament or the courts might have regarded as English public policy. A wide diversity of laws might satisfy such a test; and it would offer no basis for evaluating the weight to be attached to the pre-existence of English property rights, which the English legislature created and has done nothing to affect. Nor could Mr Greenwood say what would happen if several foreign governments purported to pass different legislation protective of the original composer in relating to English property. This is not so remote a possibility – as is illustrated by the fact that one of the original contracts giving rise to the present copyright was subject to New York, rather than Cuban law (Aldous LJ’s judgment, paragraph 8).
In short, for all the reasons given by Devlin J at pp.258-263, public policy provides no satisfactory principle upon which to displace the recognised and “simple rule that generally property in England is subject to English law and to none other”: Bank voor Handel, per Devlin J at p.260.
Lord Justice Latham:
I agree with the judgment of Lord Justice Aldous.