The Recast Brussels Regulation (EU 1215/2012) comes into force on 10 January 2015. Existing proceedings or judgments obtained prior to 10 January 2015 will continue to be governed by the Brussels Regulation (EC 44/2001). The Recast Brussels Regulation seeks to address a number of shortcomings that have been encountered in applying the Brussels Regulation. The key changes that will affect commercial parties involved in disputes are summarised below.
(1) Ending cross-border "torpedo actions"
The current position under EU law is that the court first seised of proceedings must determine whether it has jurisdiction over a dispute. This applies even where those proceedings are brought in breach of a jurisdiction agreement in favour of the courts of another member state. This has resulted in parties issuing proceedings in courts other than those chosen by the parties with the aim of causing tactical delays and "torpedoing" the proceedings. The Recast Brussels Regulation effectively reverses this rule by providing that where the parties have conferred exclusive jurisdiction on the courts of a member state, any other member state court shall stay the proceedings brought before it (even if that court was first seised) until the court with jurisdiction under the jurisdiction agreement has decided whether it will exercise jurisdiction over the matter.
(2) Extending the scope of jurisdiction agreements
For a jurisdiction agreement to be valid under Regulation 44/2001, one of the parties had to be domiciled in a member state. This rule has been changed and the Recast Brussels Regulation will now protect jurisdiction agreements between non-EU parties which confer jurisdiction on the courts of a member state (Article 25(1)).
(3) New lis pendens rule for third state (i.e. non- EU member state) proceedings
The Recast Brussels Regulation provides member state courts with a limited discretion to stay proceedings, which involve the same cause of action and the same parties as proceedings in a third (non-EU) state, or where there are related proceedings in a third state. The proceedings in the third state must have been commenced first, and a number of other requirements must also be satisfied for the rule to bite.
(4) Streamlining the process for enforcement of judgments across member states
To enforce a civil judgment obtained in one member state in another member state, a judgement creditor is currently required to obtain a declaration of enforceability from the enforcing member state court. This has caused delays in some jurisdictions. This requirement has been removed by the Recast Brussels Regulation and it will now only be necessary to present a copy of the judgment and a standard form certificate for the enforcement process to begin.
(5) Re-enforcing the arbitration exception
The Recast Brussels Regulation also seeks to address the situation where an arbitration agreement provides for the arbitral law of a member state and for its court's supervisory jurisdiction, but one party has issued prior proceedings in another member state's courts. The decision in West Tankers, confirmed that the court of the member state agreed upon by the parties under the arbitration agreement would have to stay any proceedings in favour of the member state court that was first seised. The Recast Brussels Regulation reinforces the existing arbitration exception, by:
- confirming that member state courts retain the right to rule on the validity and scope of arbitration agreements and to stay proceedings in favour of arbitration in accordance with their own national law and that they should not be subject to the rules of recognition and enforcement laid down in the Recast Brussels Regulation (Recital 12); and
- confirming that the New York Convention takes precedence over the Recast Brussels Regulation enabling member state courts to enforce an arbitral award even where it is inconsistent with the judgment of the courts of another member state (Article 73(2) and Recital 12).