Litigating In Harmony: The Standardisation Of EU Cross-Border Dispute Resolution Procedures

Like many areas of legal practice, litigation has evolved over time to adapt to its place in an increasingly globalised world. The ever-increasing incidence of commercial disputes involving litigants in different jurisdictions has prompted supra-national legislators, including the institutions of the EU, to seek to improve the efficacy and ease with which cross-border disputes are handled. This article examines the key pieces of legislation that have been enacted by the EU towards harmonising litigation and dispute resolution procedures across its member states.

The moves towards harmonisation have a firm basis in EU law. The terms of the EU's direct competence in the sphere of judicial co-operation in civil matters having cross-border implications are outlined in Article 81 of the Treaty on the Functioning of the EU (TFEU). Judicial co-operation in the EU was formerly part of the third pillar, such that policy-making in the area was driven solely by inter-governmental co-operation. Direct competence to legislate in this area on behalf of member states was provided for under Article 65 of the EC Treaty, which signalled the shift from third to first pillar. Co-operation on judicial matters in a cross-border context between member states has long been encouraged by the EU. However, the institutions lacked a direct competence to directly legislate in this sphere until the Treaty of Amsterdam was signed on 2 October 1997. The Treaty of Amsterdam modified the legal basis for co-operation in civil matters within the EU and led to the formal incorporation of several pre-existing agreements between the member states in this area. Subsequent additional instruments designed to improve dispute resolution mechanisms for citizens of the EU and companies doing business within its borders were also enacted.

The harmonisation of dispute resolution procedures within the EU can be grouped broadly under six headings. These are:

Jurisdiction. Mutual recognition and enforcement of judgments. Service of judicial and extrajudicial documents. Taking of evidence abroad. Debt recovery and small claims. Mediation and arbitration. JURISDICTION

A fundamental question that arises with any piece of litigation involving parties based in different countries is the jurisdiction in which it should be litigated. Before the introduction of Regulation (EC) 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Brussels I) and its predecessor, the convention on civil jurisdiction and the enforcement of judgments (Brussels Convention), choice of jurisdiction as between EU member states was determined by reference to national rules of jurisdiction and international law. The Brussels Convention was signed into law in the EU in 1968, and enacted into Irish law by the Jurisdiction of Courts and Enforcement of Judgments (European Communities) Act 1988, and re-enacted by the Jurisdiction of Courts and Enforcement of Judgments Act 1998. Brussels I was given full effect under Irish law by the European Communities (Civil and Commercial Judgments) Regulations 2002.

Brussels I is now the principal instrument through which proper jurisdiction is determined under EU law. The rules of Brussels I apply to all EU member states, including Denmark by way of a separate, but similar agreement (Agreement between the European Community and the Kingdom of Denmark on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters approved by Council Decision 2006/625/EC, entered into force on 1 July 2007). A further sister agreement, Convention on jurisdiction and the enforcement of judgments in civil and commercial matters (Lugano Convention), governs proper jurisdiction as between EU member states and those of the European Free Trade Association (EFTA) (Norway, Iceland, Switzerland and Liechtenstein), along similar lines to Brussels I.

Application and rules of jurisdiction under Brussels I

The type of dispute to which the rules of jurisdiction under Brussels I apply (that is, civil and commercial matters) is governed by Article 1 of the Regulation (Article 1, Brussels I). Certain categories of dispute are specifically excluded, including those relating to:

Revenue and customs. Administrative matters. Bankruptcy. Matters of arbitration. Disputes involving individuals in their private capacities, such as marital disputes, social security and issues relating to wills and succession. Under Brussels I, the general rule of jurisdiction is that proper jurisdiction is governed by the defendant's domicile (Article 2, Brussels I). However, there are a number of exceptions to the general rule that a party should be sued in the member state in which it is domiciled. These exceptions are known as the Special Rules of Jurisdiction, and include the following (sections 2 to 7, Chapter II, Brussels I):

In disputes based on contract, the action may be pursued in the jurisdiction which is the place of performance of the contract. In matters of tort, the proceedings may be issued in the jurisdiction in which the harm occurred. In connected proceedings or where there are multiple defendants domiciled in different member states, they may be sued in any member state where one, or more, of them is domiciled. In third party claims, the third parties to an action may be sued in the member state where the main proceedings are being litigated, even if this is not the jurisdiction in which they are domiciled themselves. In counterclaims, a party sued by way of counterclaim may be sued in the member state which has exercised jurisdiction in the original claim. In insurance actions, a policy holder can institute proceedings either in the member state where the insurer is domiciled or in its own member state. In consumer contract claims, consumers can bring proceedings either in the courts of their own member states or where the defendant is domiciled. In actions concerning employment contracts, an employer can be sued in the member state in which it is domiciled or in the member state where the employee habitually carries (or carried) out work. The employer can also be sued in the jurisdiction where its main centre of business is held, if different to its country of domicile. The issue of domicile for the purposes of Brussels I is a matter of each member state's domestic law (Article 59(2)).

Proposals for reform of Brussels I

The European Commission (Commission) presented a proposal for revision of Brussels I (Proposal for a Regulation of the European Parliament and of the Council on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Recast) ) (COM 2010) on 14 December 2010, recommending some key changes insofar as it relates to jurisdiction, to tackle what are considered to be weaknesses in its application. Two of these recommendations are...