International Financial Fraud Jurisdiction

Extract

[...] In this case, a French national investor made transfers from his account in a French bank to the account of a third party in a Polish bank, thinking he was investing in cryptocurrencies, before realizing it was a scam. The victim then sues the French and Polish banks for damages for their failure to exercise due diligence and vigilance. The Polish bank raises an exception of lack of jurisdiction and a plea of prescription. The judgment is unknown, but one of the parties appeals. [...]

[...] This judgment focuses on two essential questions in private international law, namely international jurisdiction and conflict of laws rules. It will be noted that on the one hand, the consecration of a flexible approach to connection in the case of multiple defendants and, on the other hand, the requirement of a concrete analysis of the place of realization of the damage in the case of international financial fraud (II). I. The consecration of a flexible approach to connection in the case of multiple defendants The Court of Cassation holds that the victim-investor may sue the issuing and receiving banks of the disputed transfers before the same jurisdiction as co-defendants, regardless of whether the claims were based on different laws. [...]

[...] Thus, French law should be applicable. The Court of Cassation is then called upon to answer the following questions: on the one hand, can the French courts be competent, on the basis of Article 8 §1 of the Brussels I Regulation bis, to determine whether an action directed against several defendants established in different States, when their alleged responsibilities are based on distinct shortcomings but having contributed to the same damage? On the other hand, in the context of a financial scam involving international transfers, does the damage occur at the place of the debited account or at the place of the credited account? [...]

[...] The terms of the investment conclusion and the circumstances that led the victim to act then become decisive. This assessment in concreto the place of realization of the damage is intended to protect the victims, especially vulnerable individuals against the well-worn techniques of cyber scammers, but may pose problems of legal predictability by refusing to admit an automatic localization of the damage. B. The refusal of an automatic localization of the damage instead of the diversion of funds The Court of Cassation censures the Court of Appeal because it held that the damage had occurred in Poland, the country where the funds were misappropriated. [...]

[...] The Polish bank complains that the judgment erred in rejecting the exception of lack of jurisdiction, as to consider decisions as inconsistent, it would be necessary that the divergences inscribe themselves in the framework of the same factual and legal situation. However, it would not be the same situation in this case, as the grievances against the French bank would be different from those against the Polish bank. The victim, on the other hand, complains that the judgment erred in declaring her claim against the Polish bank inadmissible by application of Polish law, when the damage would have occurred in France. [...]