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CONNECTION AND COHERENCE BETWEEN AND AMONG EUROPEAN INSTRUMENTS IN THE PRIVATE INTERNATIONAL LAW OF OBLIGATIONS

  • Elizabeth B Crawford (a1) and Janeen M Carruthers (a2)

Abstract

This article considers points of connection and coherence between and among the Rome I Regulation, the Rome II Regulation, and Regulation 1215, and relevant predecessor instruments. The degree of consistency in aim, design and detail of conflict of laws rules is examined, vertically (between/among consecutive instruments) and horizontally (across cognate instruments). Symbiosis between instruments is explored, as is the interrelationship between choice of court and choice of law. Disadvantaged parties, and the cohesiveness of their treatment under the Regulations, receive particular attention.

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1 Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations, art 28 (as amended by Corrigendum of 19 October 2009 (13497/1/09, REV 1, JUR369).

2 See exclusions from scope of instrument in Rome I Regulation, art 1.2 and 1.3; Rome II Regulation, art 1.2 and 1.3, and Regulation 1215 (q.v.) art 1.2.

3 OJ 20 December 2012, L351/1. See for background Crawford, EB and Carruthers, JM, ‘Brussels I bis – the Brussels I Regulation recast: closure (for the foreseeable future)2013 SLT (News) 89.

4 On matters of jurisdiction and judgment enforcement, reference in this article principally will be to Regulation 1215, but also, where specified, to the Brussels Regulation.

5 1968 Brussels Convention on jurisdiction and the enforcement of judgments in civil and commercial matters (‘Brussels Convention’); and 1980 Rome Convention on the Law Applicable to Contractual Obligations (‘Rome Convention’).

6 A form of parallel continuity is represented by the 1988 Lugano Convention on jurisdiction and enforcement of judgments in civil and commercial matters (horizontal continuity with the 1968 Brussels Convention), and by the 2007 Lugano II Convention (vertical continuity with Lugano I; and horizontal continuity with the Brussels Regulation).

7 For vertical continuity between the 1968 Brussels Convention and the Brussels Regulation, see Brussels Regulation, recital (19).

8 Equally, it must be borne in mind that evolutionary change in the core European instruments may be deliberately eschewed in rules applicable domestically within a given Member State. See eg Fishers Services Ltd v All Thai'd Up Ltd t/a Richmond House Hotel 2013 GWD 13-273.

9 Regulation 1215, recital (34).

10 Supplemented, however, by a new ground of jurisdiction in respect of civil claims for the recovery, based on ownership, of cultural objects (art 7.4).

11 With regard to disadvantaged parties, the provisions in Regulation 1215 concerning insured parties appear in arts 10–16 (ex-arts 8–14); those concerning consumers in arts 17–19 (ex-arts 15–17); and those in respect of employees in arts 20–23 (ex-arts 18–21). See further Section IV, below.

12 Renate Ilsinger v Martin Dreschers, acting as administrator in the insolvency of Schlank & Schick GmbH Case C-180/06 OJ 2009 C153/3, [2009] ECR 1-3961.

13 Engler v Janus Versand GmbH Case C-27/02 [2005] ECR 1-481.

14 See Opinion of Advocate General Trstenjak, Renate Ilsinger v Martin Dreschers Case C-180/06 [2009] ECR 00, paras 36–37.

15 Glaxosmithkline and another v Rouard Case C-462/06 [2008] ICR 1375.

16 Renate Ilsinger v Martin Dreschers Case C-180/06 OJ 2009 C153/3, [2009] ECR 1-3961, para. 41.

17 There is no equivalent extension of jurisdiction with regard to non-EU domiciled insurers beyond the pre-existing ‘branch, agency’ concession contained in art 11.2 of Regulation 1215.

18 See further Section IV, below.

19 [2004] EWHC 569 (Comm); [2004] 2 Lloyd's Rep. 99.

20 The fact that the parties have chosen a foreign law shall not, where all the other elements relevant to the situation at the time of the choice are connected with one country only, prejudice ‘mandatory rules’ of that country.

22 eg in applicable law in obligations: Rome I, art 18 = Rome II, art 22 (burden of proof); Rome I, art 20 = Rome II, art 24 (exclusion of renvoi); Rome I, art 21 = Rome II, art 26 (public policy); Rome I, art 22 = Rome II, art 25 (states with more than one legal system); Rome I, art 23 = Rome II, art 27 (other provisions of Community law); Rome I, art 25 = Rome II, art 28 (relationship with other international conventions); and Rome I, art 27 = Rome II, art 30 (review clause).

23 cf recital (7) Rome II. Regulation 1215 has no horizontal continuity provision.

24 eg in the subject of awards of damages in contractual and non-contractual disputes. cf Rome I Regulation, art 12.1.c and Rome II Regulation, art 15c, both shifting power to fix the award of damages in favour of the lex causae. For background in relation to the rule in non-contractual obligations, see Harding v Wealands [2007] 2 AC 1; Panagopoulos, G, ‘Substance and Procedure in Private International Law’ (2005) 1(1) JPrivIntlL 69; Carruthers, JM, ‘Damages in the Conflict of Laws – the Substance and Procedure Spectrum: Harding v Wealands’ (2005) 1(2) JPrivIntlL 323; and Weintraub, R, ‘Choice of Law for Quantification of Damages: A Judgment of the House of Lords makes a Bad Rule Worse’ (2007) 43 TexasIntlLJ 311l.

25 Affirmation of this interpretative strategy, to some extent, may be drawn from Rome I Regulation, recital (17), which enjoins consistency of interpretation of the applicable law rule in the absence of choice in contracts for the provision of services and sale of goods, and the special jurisdiction rule in art 5.1 of the Brussels Regulation. This very connection between Rome I and Brussels Regulation is attributable to changes in wording introduced in the Rome I Regulation.

26 In respect of franchisees and distributors, however, court and law appear to coincide. Applying the bespoke rules in the Rome I Regulation, art 4.1.e and f, in combination with Regulation 1215, art 7 (ex-Brussels Regulation, art 5), there would be a match between court and law: the franchisee's/distributor's court and law will be selected.

27 Bier BV v Mines de Potasse d'Alsace SA [1978] QB 708.

28 Rome II Regulation, art 4.1.

29 See below, Section III.B.2.

30 cf under Brussels Regulation, Peter Rehder v Air Baltic Corporation (reference from the Bundesgerichtshof, Germany) OJ 2009 C205/8; and Car Trim GmbH v KaySafety Systems SRL (reference from the Bundesgerichtshof, Germany).

31 This is confirmed by the softening of the rule in favour of such parties (specifically named), per art 26.2. See Section IV.A, below.

32 Arts 10, 17.1 and 20.1.

33 Regarding defendants not domiciled in a Member State.

34 Special jurisdiction as regards disputes arising out of the operations of a branch, agency or other establishment.

35 See eg decision of the German Federal Supreme Court in In Re a Mail Order Promise of Win in a Draw [2003] ILPr 46. See Section IV. B, below.

36 Kalfelis v Schroder [1988] ECR 5565; [1989] ECC 407 (a case under Brussels Convention). See also Source Ltd v TUV Rheinland Holding AG [1998] QB 54.

37 Burke v UVEX Sports GmbH, Motorrad TAF GmbH (Record No 2003 4850P) before the Irish High Court [2005] ILPr 26 (a Brussels Regulation case). See contra, Re a Mail Order Promise of Win in a Draw [2003] ILPr 46 (German Federal Supreme Court), which is distinguishable from the scenario in Burke, where there was no doubt that a contract existed.

38 It was agreed between the parties, and accepted by Herbert J, that the contract between Burke and the second defendant was not a consumer contract within the provisions of arts 15–17 of the Brussels I Regulation (para 31).

39 See Hill, J and Chong, A, International Commercial Disputes: Commercial Conflicts of Laws in English Courts (4th edn, Hart 2010) para 5.6.8; and Magnus, U and Mankowski, P (eds), European Commentaries on Private International Law: Brussels I Regulation (2nd rev edn, Sellier European Law Publishers 2012) 116–19. Possibly, in practice, the approach taken may be less ‘legalistic’. See discussion in Fawcett, JJ and Carruthers, JM (eds), Cheshire, North & Fawcett's Private International Law (14th edn, OUP 2008) 251–2.

40 As in eg Johnson v Coventry Churchill International Ltd [1992] 3 All ER 14.

41 Arts 3 and 4.

42 1973 SC 213.

43 [1971] 1 WLR 1176. See also Coupland v Arabian Gulf Oil Co [1983] 3 All ER 326; and Base Metal Trading Ltd v Shamurin [2005] 1 WLR 1157.

44 Reference to art 15b of the Rome II Regulation suggests such an approach.

45 Giuliano and Lagarde Report, at 33 reveals that the equivalent provision under the Rome I Convention, art 10.1.e, was inserted to make it clear that the applicable law under the Convention governed this issue.

46 Italy also entered a reservation under art 10.1.e.

47 Kleinwort Benson Ltd v Glasgow District Council [1999] 1 AC 153. Kleinwort is not an ECJ decision, and the ECJ may take a different view if circumstances should present for its ruling.

48 Boss Group SA v Boss Group France [1996] 4 All ER 970; Halki Shipping Corp v Sopex Oils Ltd [1997] 3 All ER 833; and Belgian International Insurance Group SA v McNicoll 1999 GWD 22-1065.

49 See Hill and Chong (n 39) para 5.6.17 citing the views of Lord Nicholls (dissenting) in Kleinwort.

50 Also art 11.1 (negotiorum gestio). cf Rome II, art 4.3.

51 The same question arises in relation to Rome II, art 4.3, but it is unlikely that a court would place great reliance on a contract of doubtful validity, in identifying the governing law in tort; and mutatis mutandis art 11.1.

52 Art 12.1.

53 See Cheshire, North & Fawcett (n 39) 835–6, where the case postulated is that during negotiations each party had tried to impose without success its preferred choice of law clause on the other, but the parties never reached consensus on the point. Or if contractual negotiations had broken off at a very early stage, it may be impossible to ascertain the applicable law—in such circumstances, art 12.2 must be intended to govern liability for any loss, though if negotiations were at a very early stage one would imagine that reparable loss such as to give rise to litigation engaging art 12.2 would be infrequently encountered.

54 Agnew v Lansforsakringsbolagens AB [2001] 1 AC 223 (a Lugano case).

55 Cheshire, North & Fawcett (n 39) 231–2.

56 Fonderie Officine Meccaniche Tacconi SpA v Heinrich Wagner Sinto Machinenfabrik GmbH Case C-334/00 [2002] ECR 1-7377.

57 See Crawford, EB, International Private Law in Scotland (W Green & Son 1998) paras 12.21–12.31; and North, PM and Fawcett, JJ, Cheshire and North's Private International Law (11th edn, Butterworths 1987) ch 18.

58 Presumably governing also the formal requirements of choice of court clauses adverted to in arts 15, 19 and 23 of Regulation 1215, though such choices made by disadvantaged parties are restricted as to content in their own perceived best interests. There is interdependence, therefore, in that while art 25 appears to be the source of the rules governing the making of a valid jurisdiction agreement, no agreement can be made under the aegis of art 25 which contravenes arts 15, 19 and 23.

59 Deutsche Bank AG v Asia Pacific Broadband Wireless Communications Inc [2008]2 Lloyd's Rep 619. Considered by Vitol SA v Arcturus Merchant Trust Ltd [2009] EWHC 800 (Comm); and followed by UBS AG v HSH Nordbank AG [2009] 2 Lloyd's Rep 272. The Court of Appeal distinguished the situation from the type of case demonstrated by Bols Distilleries BV t/a Bols Royal Distilleries v Superior Yacht Services Ltd [2007] 1 WLR 12 where it could be seen that although a jurisdiction clause existed, no substantive final agreement on the contract itself had been reached between the parties.

60 Represented in the UK by Albeko Schuhmaschinen AG v Kamborian Shoe Machine Co (1961) 111 LJ 519.

61 Noting again also the prohibitions upon freedom of choice contained in Rome II, arts 6 and 8.

62 So too per art 14.3, mandatory rules of Community law.

63 See further, Section IV below.

64 cf Brodin v A R Seljan 1973 SC 213.

65 Proposal for a Regulation of the European Parliament and the Council on the Law Applicable to Contractual Obligations (Rome I) (COM (2005) 650 final; 2005/0261 (COD)) art 3.1.

66 See discussion at Crawford, EB and Carruthers, JM, International Private Law: A Scots Perspective (3rd edn, W Green & Son 2010) para 15–12.

67 cf the default position effected by combination of art 5.1.b, Brussels I Regulation, and art 4.1.a of Rome I Regulation: see above, Section II.C.

68 Regulation 1215, Chapter II, Sections 3, 4 and 5 and Rome I Regulation, arts 6, 7 and 8. As to the protection afforded by the Rome II Regulation, see Section IV.B, below.

69 Arts 8–15. Contracts of employment were provided for in the 1968 Brussels Convention under art 5.1.

70 Arts 5 and 6.

71 Arts 18–21. Protective provisions for employees, under Brussels and Rome, are restricted to ‘individual’ contracts of employment, as distinguished from collective agreements.

72 Art 7.

73 Section II.A.1, above.

74 And art 35.3.

75 Hill and Chong (n 39) para.13.3.5.

76 Albeit that the edifice of protection does not rest simply on the individual being a ‘consumer’, though being a consumer is a condition precedent.

77 cf Gruber v BayWa AG Case C-464/01 [2006] QB 204.

78 See eg Benincasa v Dentalkit Srl Case C-269/95 [1998] All ER (EC) 135, Hans-Hermann Mietz v Intership Yachting Sneek BV (Case C-99/96) [1999] ILPr 541; Standard Bank of London v Apostolakis (Protodikeio Athens) [2003] ILPr29; and Engler v Janus Versand GmbH Case 27/02 [2005] 7 CL 76 (ECJ). Contrast Chris Hart (Business Sales) Ltd v Niven 1992 SLT (Sh. Ct) 53; B. J. Mann (Advertising) Ltd v Ace Welding & Fabrications Ltd 1994 SCLR 763; Standard Bank London Ltd v Apostolakis (No 1) [2000] ILPr 766; Rayner v Davies [2003] ILPr 15; Semple Fraser v Quayle 2002 SLT (Sh Ct) 33; Prostar Management Ltd v Twaddle 2003 SLT (Sh Ct) 11; and Verein für Konsumenteninformation v Henkel Case C 167-1000 [2003] All ER (EC) 311 (ECJ).

79 Giuliano and Lagarde Report, OJ C282, 31.10.80, at 24.

80 Cheshire, North & Fawcett (n 39) 726. An intended coincidence of forum and law is visible also in relation to individual contracts of employment: see Jenard Report OJ C59 5.3.79, at 24.

81 ‘With more specific reference to consumer contracts, … Consistency with Regulation (EC) No 44/2001 requires both that there be a reference to the concept of directed activity as a condition for applying the consumer protection rule and that the concept be interpreted harmoniously in Regulation (EC) No 44/2001 and this Regulation … ’.

82 Schlosser Report, OJ C59, 5.3.79, at 119; and Giuliano and Lagarde Report, OJ C282, 31.10.80, at 24.

83 Gruber v BayWa AG Case C-464/01 [2006] QB 204. Protection under Section 3 extends to policyholders who take out insurance contracts as part of their trade or profession: New Hampshire Insurance Co v Strabag Bau AG [1992] 1 Lloyd's Rep 361. See Magnus and Mankowski (n 39) 333; and Lord Collins et al (eds), Dicey, Morris & Collins: The Conflict of Laws (15th edn, Sweet & Maxwell 2012) para 11-339, making the point in connection with New Hampshire that ‘matters relating to insurance’ is not restricted to insurance for domestic or private purposes.

84 Schlosser Report, OJ C59, 5.3.79, at 119; and Magnus and Mankowski (n 39) 365 (without, however, reference to authority).

85 Regulation 1215, recital (18) and Rome I Regulation, recital (23).

86 FBTO Schadeverzekeringen NV v Odenbreit (Case C-463/06) before the Court of Justice of the European Communities (Second Chamber) 13 December 2007 [2008] ILPr 12.

87 cf Chapter II, Sections 4 and 5.

88 See recital (13), Brussels I Regulation.

89 Vorarlberger Gebietskrankenkasse v WGV-Schwabische Allgemeine Versicherungs AG Case C-347/08 OJ 2008 C272/11, [2010] ILPr 2.

90 Universal General Insurance Co v Group Josi Reinsurance Co SA [2001] QB 68.

91 See First Council Directive 73/239/EEC of 24 July 1973, art 5.d.

92 Arts 10–16.

93 As, for example, all ‘large’ risks as defined in Directive 2009/138/ of the European Parliament and of the Council of 25 November 2009.

94 Contrast the specific exception of art 22 from the application of art 24.

95 C-116/02 [2003] ECR 1-4207.

96 cf arts 23 and 27 of the Brussels Regulation; and, by way of corrective, art 31.2 of Regulation 1215.

97 See Hill and Chong (n 39) paras 5.8.3 and 5.8.24; and Cheshire, North & Fawcett (n 39) 268, 272 and 275. More ambivalently, see Magnus and Mankowski (n 39) 390–1; the text at pages 522–3 concludes that the submission principle applies with equal force to the disadvantaged, but looks forward to a more lenient approach in Regulation 1215 (with reference to Judgment of the Court (Fourth Chamber) of 20 May 2010 (reference for a preliminary ruling from the Okresní soud v Chebu Czech Republic) Česká podnikatelská pojišt'ovna as, Vienna Insurance Group v Michal Bilas (Case C-111/09)).

98 Though under Brussels Regulation weaker parties were required to follow art 23, the content of their choice was circumscribed for their own benefit by arts 14, 17 and 21.

99 Arts 13.1, 17.1 and 21.1.

100 Jenard Report, OJ C59, 5.3.79, at 34.

101 But not as to choice of law, for Rome I Regulation, art 6 still will apply, conferring special protection (by way of restriction).

102 ie as provided for by arts 12, 16.2, and 20.

103 See Crawford and Carruthers (n 66) para 7-53.

104 ‘The conflict-of-law rule in matters of product liability should meet the objectives of fairly spreading the risks inherent in a modern high-technology society, protecting consumers' health, stimulating innovation, securing undistorted competition and facilitating trade’. (Emphasis added.)

105 ‘The law applicable to a non-contractual obligation arising out of an act of unfair competition shall be the law of the country where competitive relations or the collective interests of consumers are, or are likely to be, affected’. cf recital (21): ‘The special rule in Article 6 is not an exception to the general rule in Article 4(1) but rather a clarification of it. In matters of unfair competition, the conflict-of-law rule should protect competitors, consumers and the general public and ensure that the market economy functions properly’. (Emphasis added.)

106 Recital (27).

107 In sympathy with the jurisdictional principle of ubiquity contained in Bier BV v Mines de Potasse D'Alsace SA (21/76) [1978] QB 708.

108 Recital (25): ‘Regarding environmental damage, … the principle that the polluter pays, fully justifies the use of the principle of discriminating in favour of the person sustaining the damage’. (Emphasis added.)

109 Kalfelis v Schroder [1988] ECR 5565; [1989] ECC 407 (a Brussels Convention case). See also Source Ltd v TUV Rheinland Holding AG [1998] QB 54. See Section II.D, above.

110 See Hill and Chong (n 39) para 5.6.8.

111 See Kleinwort Benson Ltd v Glasgow City Council [1999] 1 AC 153. But see above, Section III.B.1, re consideration of jurisdiction in cases of nullity of contract.

112 Base Metal Trading Ltd v Shamurin [2005] 1 WLR 1157, being concerned with choice of law, is not on all fours with the point under discussion.

113 Example cited in Cheshire, North & Fawcett (n 39) 252, discussing Domicrest v Swiss Bank Corporation [1999] QB 548, per Rix J at 561.

114 Kalfelis v Schroder [1988] ECR 5565; [1989] ECC 407, para 19.

115 Kleinwort Benson Ltd v Glasgow City Council [1996] QB 678 (Court of Appeal—reversed by House of Lords on another point), per Millett LJ, at 698, cited with approval in Source Ltd v TUV Rheinland Holding AG [1998] QB 54, per Staughton LJ at 63.

116 Discussed above, Section II.D. See discussion in Cheshire, North & Fawcett's Private International Law (n 39) 251–2.

117 But see Merrett, L, Employment Contracts in Private International Law (OUP 2011) at para 4.49, pertaining to a distinction which may be legitimate to make in connection with the specialties of employment cases.

118 Rome II, art 5.1.b.

119 Rome II, art 5.1.c.

120 Rome II, art 5.2. Rome I Regulation, art 6 affords the forum no such discretion.

121 Contrast Rome II, arts 6.4 (unfair competition) and 8.3 (infringement of intellectual property rights).

122 Arts 6.4 and 8.3 both provide that: ‘The law applicable under this Article may not be derogated from by an agreement pursuant to Article 14.’

123 See also recital (31): ‘To respect the principle of party autonomy and to enhance legal certainty, the parties should be allowed to make a choice as to the law applicable to a non-contractual obligation. This choice should be expressed or demonstrated with reasonable certainty by the circumstances of the case. Where establishing the existence of the agreement, the court has to respect the intentions of the parties. Protection should be given to weaker parties by imposing certain conditions on the choice.’

124 See Dickinson, A, The Rome II Regulation: The Law Applicable to Non-Contractual Obligations (OUP 2008) 540; and Carruthers, JM and Crawford, EB, ‘Variations on a Theme of Rome II: Reflections on Proposed Choice of Law Rules for Non-Contractual Obligations, Part I’ (2005) 9 EdinLR 65, 87–8.

125 North, PM, Essays in Private International Law (OUP 1993) 85–6.

126 Regulation 1215, arts 15, 19 and 23 (ex-Brussels I Regulation, arts 13, 17 and 21).

127 cf example postulated above at Section III.C.2.

128 Rome I Regulation, art 23; and Rome II Regulation, art 27. Further, with regard to road traffic accidents taking place within the EU, for example, account must be taken of Directive 2009/103/EC of the European Parliament and of the Council of 16 September 2009 relating to insurance against civil liability in respect of the use of motor vehicles, and the enforcement of the obligation to insure against such liability (OJ 2009 L263/11). See also the Proposal for a Regulation on a Common European Sales Law (CESL) (COM (2011) 635 final; 2011/0284 (COD)).

129 For example, in disputes concerning individual contracts of employment, questions may arise as to the intended territorial scope of a domestic statute of the lex causae. See further Merrett (n 117) para 1.12–1.16; and Crawford and Carruthers (n 66) para 3.07.

130 Protocol No 21 on the position of the UK and Ireland in respect of the Area of Freedom, Security and Justice (OJ 2008 C115/295) (ex-Protocol No 4 (OJ 1997 C340/99)).

131 eg enhanced cooperation per Council Regulation (EU) No 1259/201 of 20 December 2010 implementing enhanced cooperation in the area of the law applicable to divorce and legal separation (‘Rome III’).

132 As among eg Regulation (EU) No 650/2012 of the European Parliament and of the Council of 4 July 2012 on jurisdiction, applicable law, recognition and enforcement of decisions and acceptance and enforcement of authentic instruments in matters of succession and on the creation of a European Certificate of Succession; the Proposal for a Council Regulation on jurisdiction, applicable law and the recognition and enforcement of decisions in matters of matrimonial property regimes COM (2011) 126 final; 2011/0059 (CNS); and the parallel Proposal for a Council Regulation on jurisdiction, applicable law and the recognition and enforcement of decisions regarding the property consequences of registered partnerships COM (2011) 127 final; 2011/0060 (CNS).

133 Owusu v Jackson (t/a Villa Holidays Bal Inn Villas) (C-281/02) [2005] QB 801. See also Samengo-Turner v J&H Marsh & McLennan Services Ltd [2007] EWCA Civ 723.

134 Orams v Apostolides [2007] 1 WLR. 241, reversed by Apostolides v Orams Case C-420/07, Times, 1 May 2009.

135 eg Catalyst Investment Group Ltd v Max Lewinsohn et al [2009] EWHC 1964 (Ch); and Ferrexpo AG v Gilson Investments Ltd & ors [2012] EWHC 721 (Comm).

136 Regulation 1215, art 79.

137 eg Rome I Regulation, art 25; Rome II Regulation, art 28; and Regulation 1215, art 71.

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CONNECTION AND COHERENCE BETWEEN AND AMONG EUROPEAN INSTRUMENTS IN THE PRIVATE INTERNATIONAL LAW OF OBLIGATIONS

  • Elizabeth B Crawford (a1) and Janeen M Carruthers (a2)

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