#5218 - Islamic Republic Of Iran V. Berend - Conflict of Laws BCL

Islamic Republic of Iran v. Berend

Facts

The Islamic Republic of Iran seeks to recover the fragment as part of a national monument to which it claims entitlement in accordance with certain legal provisions dating from the first half of the twentieth century. The defendant, Mme Denyse Berend, resists the claim primarily on the basis that she had acquired title in the fragment after it was sold to her through an agent at a New York auction in October 1974. (It is perhaps worth noting that the vendor had himself also acquired the piece at public auction in New York in May 1974.) It is submitted that, in accordance with French domestic law, the defendant acquired title in good faith when it was delivered to her in Paris on 10 November 1974. Alternatively, it is submitted that she would have acquired title by prescription after 30 years' possession in November 2004.

The fragment is here in the safe keeping of Christie's to whom it was delivered in January 2005 (after an export licence was obtained from the French government). It was due to be sold by Christie's in London on 20 April 2005 but, on the day before, an injunction was granted by Silber J in favour of Iran. That is where matters now stand and how it comes about that the claim is brought in this jurisdiction.

Points of agreement between the parties

1. The fragment was the property of the Claimant immediately before it was exported from Iran.

2. The Defendant does not rely on any fact or event as defeating the Claimant's title to the fragment prior to her alleged acquisition of possession in Paris in November 1974.

3. As a matter of English law and of French law the fragment is to be characterised as movable property.

4. If, as a matter of French law, Iranian law governs the question whether the Defendant's alleged acquisition of possession of the fragment in November 2004 [sic] and/or any subsequent events or lapse of time prior to April 2005 confer title on the Defendant, the Claimant retains title to the fragment.

5. The general rule in French law is that title to a movable is governed by the lex situs, ie. the law where the object is situated at the time of the event(s) said to confer title.

6. The French lex situs rule is a rule of judge made law.

Questions

As a matter of the English conflict of laws rules, in determining the question of title to the fragment as movable property situated in France, will the English court (as the Defendant contends) apply only the relevant provisions of French domestic law, or (as the Claimant contends) apply the relevant French conflict of laws rules as well as any relevant substantive provisions of French domestic law (thereby giving effect to a renvoi)?

Holding

Defendant’s argument: (i) The fragment is to be characterised as movable property. Accordingly, the English conflict of laws rules dictate that French law governs the question of title to the fragment, since the defendant obtained her title to it at a time when the fragment was in France (ie on delivery in November 1974).

(ii) The defendant took possession of the fragment in good faith, on delivery, and at that moment obtained good title in accordance with art 2279 of the Civil Code.

(iii) Even if this proposition were wrong, the fragment was nonetheless in the defendant's continuous and open possession for a period of more than 30 years. Accordingly, she would have obtained good title by prescription in accordance with art 2262 of the code.

Claimant’s argument: It is now submitted that the English court should not simply apply French domestic law, but should apply also the French conflict of laws rules. That is to say, I should apply the doctrine of renvoi. It is recognised that there is no English authority directly in point and that, if I were to do so, this would be the first application in this jurisdiction of the doctrine to movable property.

Assuming that I were prepared to bring into play the French rules of private international law, the claimant submits that I should in doing so proceed on the premise that a French judge would introduce an exception to its traditional lex situs rule and apply the law of Iran (as the state of origin). This would be on the basis that the fragment should be regarded as artistic or cultural property. As both parties recognise, there is no reported French case law to support such an exception. I must now turn, therefore, to the claimant's case on how this hiatus is to be filled.

Should Renvoi apply to questions relating to title to movable property?

There is no binding authority to the effect that English private international law will apply the renvoi doctrine to such questions. Whether or not it should apply in any given circumstances is largely a question of policy. To take examples, it has been applied most frequently in the context of the law of succession; on the other hand, it is not applied in the fields of contractual relations or tort. It seems that the modern approach towards renvoi is that there is no over-arching doctrine to be applied, but it will be seen as a useful tool to be applied where appropriate.

The nature of the policy considerations which come into play was addressed by Millett J in Macmillan Inc v Bishopsgate Investment Trust plc (No 3) [1995] 3 All ER 747 at 776-777, [1995] 1 WLR 978 at 1008:

The determination of a question of priority between competing claims to property is based on considerations of domestic legal policy, since it involves striking a balance between two competing desiderata, the security of title and the security of a purchase. A decision by an English court, based on English principles of conflict of laws, that the question should be determined by the application of the rules of a foreign law is also based on considerations of legal policy, albeit at a higher level of abstraction. It involves a policy decision, at the higher level, that the policy which has been adopted, at the lower level, by English law should not be applied because the considerations which led to its adoption in the domestic law are not relevant in the particular circumstances of the case; and to a policy decision, at a higher level, that the policy which has been adopted, at the lower level, by the foreign law should be applied in its stead. In my judgment there is or ought to be no scope for the doctrine of renvoi in determining a question of priority be-tween competing claims to shares, and in the absence of authority which compels me to do so--and there is none--I am not willing to extend it to such a question.

On the other hand, my attention was drawn to a passage in the judgment of Moore-Bick J...