New rules on jurisdiction and enforcement of judgments in EU

For the last decade and a half, the Brussels I Regulation (Regulation (EC) 44/2001) was the key EU law instrument governing jurisdiction and enforcement of judgments in civil and commercial matters. These provisions have been significantly revised and, as of 10 January 2015, they will be replaced by Regulation (EU) 1215/2012 (the “Brussels I Recast”), which aims to facilitate litigation by implementing automatically enforceable cross-border judgments across the European Union and clarifying jurisdictional disputes between courts of the Member States.

The fundamental change brought by Brussels I Recast is the elimination of the “exequatur” procedure, allowing the creditor to automatically enforce a civil or commercial judgment rendered in a different member state without further expensive and time-consuming formalities. However, the interested party may oppose the enforcement of the foreign judgment based on several limited reasons (i.e. the recognition is manifestly contrary to public policy or the judgment is irreconcilable with a judgment given between the same parties in the member state addressed). The practical importance of this amendment would be cost reduction and simplified procedure.

Equally important is the amendment of the provisions governing lis pendens. According to the Brussels I Recast, the court designated by the exclusive jurisdiction clause will have priority, in the sense that all other courts seized will have to stay the proceedings until the court named in the exclusive jurisdiction clause hears the case. Under the previous regulation, the proceedings were stayed until the first seized court ruled on jurisdiction and as a result “tactical claims” were introduced in order to delay the procedure.

Brussels I Recast will apply to disputes regardless if the parties domicile in the EU as long as the court has exclusive jurisdiction according to the jurisdiction clause. The practical benefit of this change is that it strengthens the autonomy of the parties and also protects the interests of non-EU consumers and employees. Furthermore, the jurisdiction clause is treated separately from the main contract, therefore, the validity of the jurisdictional clause cannot be contested solely on the invalidity of the substantive contract.

Finally, it is important to note that Brussels I Recast does not apply to arbitration clauses, preserving the “arbitration exception”. If a member state court is seized with an action regarding a matter upon which the parties concluded an arbitration agreement, the court should refer the parties to arbitration, stay the proceedings or examine if the arbitration clause is null and void, inoperative or incapable of being performed.

Council Regulation (EC) No 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters was amended by Regulation No 1215/2012 of 12 December 2012 which came into force on 10 January 2015. The Brussels I Recast will apply only to legal proceedings instituted on or after 10 January 2015.