The Recast Brussels Regulation: Enhancing The Effectiveness Of Jurisdiction Agreements

Reforms to the Brussels Regulation (on jurisdiction, recognition and enforcement of judgments in civil and commercial matters in the EU) apply from 10 January 2015. In an article in our Winter 2014 Shipping E-Brief ("The recast Brussels Regulation: reinforcing the arbitration exception" – see link below), we considered how certain of the changes might affect the interaction between proceedings in court and arbitration. In this follow-up article, we address a different topic: how the recast Regulation is intended to strengthen choice of court (i.e. exclusive jurisdiction) agreements.

Background - jurisdiction under the Regulation

The general rule in the Regulation is that a defendant must be sued in the courts of his country of domicile (Article 2). There are various exceptions – for example, in relation to contract matters (where the defendant may be sued "in the courts for the place of performance of the obligation in question") and tort (where he may be sued "in the courts for the place where the harmful event occurred or may occur") (Article 4). A further exception is where there is an exclusive jurisdiction agreement: an EU member state court will have jurisdiction over a dispute where the parties have agreed that it should do so, provided at least one of those parties is domiciled in the EU (Article 23).

The Regulation also provides for what is to happen if proceedings are started in different EU member states in relation to the same cause of action and between the same parties. In that event, the court first seised takes precedence. The court second seised is required to stay its proceedings - until the first court has determined whether or not it has jurisdiction (Article 27).

The lack of flexibility in the application of Article 27 has proved controversial and been widely criticised, not least since it allows for disruptive litigation tactics to flourish. These include the so-called "torpedo" or "Italian torpedo", where a party prospectively facing a claim takes the pre-emptive step of seeking a declaration of non-liability, usually in his local court, while being fully aware that a court in a different member state is provided for in a jurisdiction agreement. The strategy is aimed at delay and obstruction, and at taking advantage of the strictly applied lis pendens rule in Article 27. In Research in Motion v. Visto Corporation [2008] EWCA Civ153, the Court of Appeal noted that:

"much ingenuity is expended on all this elaborate game...