2.4.3. Co-operation in Conflict of Laws: Concurrent Regulatory Jurisdiction as Shared Regulatory Responsibility

It is submitted that Community law docs not make a choice ot law in cases of c o n current

and conflicting (exercise of) regulatory jurisdiction. At the end of the day, such

a situation of conflict of laws presupposes that the regulatory measures of more than

one Member State may lawfully be applied. Moreover, the duty to assist viz. accord

effect to a sister Member State's mandatory rule of law under Article 10 EC does not

override a Member State's own regulatory powers." Community law accepts that

there may be legitimate differences between the regulatory choices of the Member

States. Undeniably this leaves in place a source of burdens to trade. Then again, it is

well established that negative integration through the freedoms alone does not and

cannot eliminate all obstacles to intra-Community trade. To realise fully the Internal

Market, approaching a domestic market as closely as possible, positive Community

action in the form ol harmonisation is required. However, in the absence of harmonisation,

obstacles to trade 'resulting from disparities between the national laws' must

be accepted.

Although Community law does not provide for a 'choice of law', neither does it leave

the Member States entirely unaffected in these instances. Member States remain bound

by the duty to provide mutual assistance and to co-operate with each other in good

faith. After all, this duty exists both as a limitation on and as an extension of the exercise

ot regulatory jurisdiction. This duty of co-operation does not result in a straightforward

duty to accord effect to each other's measures and laws. Rather it should be

understood as instructing Member States to enter into sincere co-operation with a

view to mitigate burdens to interstate trade (li mini t ion) as well as with the aim of c o ordinating

and/or reconciling their conflicting regulatory choices (extension) f"

Concurrent regulatory jurisdiction may therefore properly be seen as shared regulatory

responsibility.

A duty of mutual assistance and co-operation may appear too vague a concept to be

useful in the conflict of laws. However, such a duty should be seen in light of a more

general tendency in the conflict of laws towards enhancing regulatory co-ordination

and co-operation among states and state agencies, particularly in international economic

law. Co-operation is increasingly being considered an effective and viable

alternative to traditional conflict of laws solutions, lessening 'reliance on a balancing

of the interests and power of individual states'.""" In tact, efforts aiming to enhance

regulatory co-operation indicate that co-operation in order to resolve (or at least

mitigate) conflicts maybe envisaged at all levels of jurisdiction: enforcement, legislative

and judicial.

An example of co-operation at enforcement level is presented by international

competition law. Both the United States and the European Union accord (a degree

of) extraterritorial effect to their competition laws. 1 Consequently, conflicts may arise

where both claim jurisdiction over the same activity and/or where one claims jurisdiction

over activity that affects the competitive structures on its market but that takes

place (predominantly) in the other's territory. In light of these potential conflicts, the

United States and the European Union concluded an Agreement regarding the application

of their competition laws in 1991. The general aim of the Agreement is to

'promote cooperation and coordination and lessen the possibility or impact of differences

between the Parties in the application of their competition laws'. For this

purpose the Agreement provides for rules relating to notification and exchange of

information on regular basis, Article II and III, as well as consultation in Article V IE

The core of the Agreement however exists in a general co-operation clause as well as

negative and positive comity clauses.

The general co-operation clause contained in Article IV deals both with the situation

where one Party requires the aid and assistance of t he other Party, as well as with the

situation where'both Parties have an interest in pursuing enforcement activities with

regard to related situations'. In the former, the Agreement requires that 'assistance'

Section Two. Community Law and Cross-Border Insolvency Regulation

be given 'to the competition authorities of the other Party in their enforcement

activities, to the extent compatible with the assisting Party's law and important interests'.

In the latter case ot concurrent (exercise of) jurisdiction Parties 'may agree that

it is in their mutual interest to coordinate their enforcement activities'. In deciding

whether their activities should be co-ordinated Article IV lists relevant factors, including

the extent to which application of a Party's own law is necessary after the law

of t he other Party has been applied. The 'negative comity' clause of Article VI provides

that '[w]ithin the framework of its own laws and to the extent compatible with its

important interests, each Party will seek, at all stages in its enforcement activities, to

take into account the important interests of the other Party'. The 'positive comitv'

clause of Article V on the other hand concerns cases of anti-competitive behaviour

in the territory of one Party adversely affecting the interests of the other Party, and

opens the possibility for the exercise of regulatory powers in order to protect the

interests of another state. In such a case the affected party may notify and request the

other Party to exercise its jurisdiction. The 'positive comity' clause has been further

elaborated in a 1998 Agreement.--1 This latter agreement contains a fairly detailed set

of rules, in particular concerning the deference or suspension of enforcement activities

when a request under the positive comity principle has been made.

What maybe envisaged as reliance on co-operation and co-ordination in the conflict

of laws at the legislative rather than the enforcement level is well illustrated in secondary

Community legislation. Directive 2 0 0 1 / 3 1 , the so-called E-commerce directive,

sets up a regulatory framework for information services.--' In order to ensure 'an

effective protection of public interest objectives',--" the Directive allocates primary

regulatory jurisdiction to the country of the service provider." This jurisdiction is

Community-wideand (thus) extraterritorial in nature. In fact, the Directive's preamble

expressly refers to it as a 'responsibility' for the home Member State to regulate for

and protect not just its own citizens but 'all Community citizens'.""

At the same time, the Directive recognises that there may be legitimate reasons for the

Member State of destination to take certain different and/or additional measures.

Reasons include public policy, public health, public security as well as the protection of consumers.'5 1 1 Such measures will typically result in an obstacle to trade. They

therefore must be necessary and proportionate. However, for a Member State wishing

to take a particular measure, Article 3 ( 4 ) ( b ) first indent further provides that that

Member State must have 'asked the Member State referred to in paragraph 1 (the

home-state ji) to take measures and the latter did not take such measures, or they were

inadequate'. This provision essentially introduces a 'positive comity clause' at the

legislative rather than enforcement stage. Moreover, it cannot be regarded as a purely

formal requirement. The home Member State will have to respond to such a request

in good faith and examine whether the regulatory concerns of the receiving Member

State may in one way or the other be accommodated. Arguably, the procedure envisaged

should be regarded as a specific elaboration of the principle of mutual assistance

and co-operation in regulatory responsibility under Article 10 liC.

Finally, the emergence and rising importance of co-operative structures in the field

of cross-border insolvency regulation itself stands as one particularly successful

manifestation of reliance on co-operation at the judicial l e v e l . ' 1 As elaborated in the

first section of this book, the shift from 'struggle to co-operation' has produced worthwhile

results, notwithstanding the inherent'vagueness'or, better, open-ended nature

of co-operation.

It is submitted, it is co-operation of this kind that is envisaged under Community law

and the duty of mutual assistance and co-operation in good faith arising under

Article 10 EC. Though obstacles to trade 'resulting from disparities between the national

laws' must be accepted in absence of harmonisation, Member States are

nevertheless duty bound to mitigate these obstacles through mutual co-operation. '-

Concurrent regulatory jurisdiction equals shared regulatory responsibility. As to the

manner in which this duty of co-operation is to be given shape, the degree ot cooperation

to be attained, and the outcome thereof little can be said with certainty. T he

Court and Community law merely require the Member States to enter into cooperation

in good faith. The development of that co-operation again is a matter left

in first instance to the Member States and may amount to no more than 'a duty to

begin a learning process'. Nonetheless, as became clear in Zwartveld, at the end ot the

dav the Court does consider itself in a position to 'review whether ( . . . ) the duty of

sincere co-operation has been complied with'. " The duty of co-operation in shared

regulatory responsibility is therefore real and tangible and should be taken seriously.