The EU Council Regulation 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters will come into force on 10 January 2015. This will amend the Brussels Regulation (EU Council Regulation 44/2001) with the aim of streamlining the enforcement of judgments between EU Member States and clarifying the rules for the resolution of jurisdictional disputes.
The new Regulation includes the following major changes:
1. Priority given to the parties’ jurisdiction agreement
Under Article 27 of the current Regulation, where proceedings involving the same cause of action and between the same parties are brought in two Member States, the court second seised must stay its proceedings until the court first seised has ruled on jurisdiction. The practical difficulties of this rule were shown in the West Tankers1 case whereby the ECJ held that an antisuit injunction could not be granted to prevent proceedings taking place in another Member State, even if those proceedings were contrary to the parties’ jurisdiction agreement. This allowed a claimant to bring a ‘tactical’ claim in a Member State other than that agreed between the parties in order to delay or curtail the claim.
Article 31(2) of the new Regulation provides that where the parties have made an agreement as to exclusive jurisdiction, if an action is brought in any other Member State the court must stay those proceedings until such time as the court seised pursuant to the jurisdiction agreement has ruled on jurisdiction. This change will remove the risk created by the West Tankers case of a claim being brought in the wrong jurisdiction, so as to delay the progression of the claim. The limit on the application of this new Article is that it is expected it will only apply to agreements as to the exclusive jurisdiction, and not to hybrid jurisdiction agreements.
2. Preservation of the arbitration exception
The West Tankers case also found that ’a preliminary issue concerning the applicability of an arbitration agreement, including in particular its validity, also comes within its [Regulation 44/2001] scope of application’. This has had the effect, as discussed above, of drastically reducing the power of an English arbitration tribunal until the jurisdiction has been ruled on by the court first seised.
The new Regulation has stepped in to ameliorate this situation by preserving the old position in Article 2(d) that the Regulation does not apply to arbitration proceedings. The arbitration exemption has been enhanced by Article 73(2) which provides that the ’Regulation shall not affect the application of the 1958 New York Convention’.
Recital 12 of the new Regulation also provides helpful guidance as to what exactly will fall within the scope of the Regulation with regard to arbitration proceedings. It provides that the court of a Member State when seised of an action in a matter in respect of which the parties have entered into an arbitration agreement may refer the parties to arbitration, stay or dismiss the proceedings or examine whether the arbitration agreement is null and void, inoperative or incapable of being performed.
3. Judgments will be automatically enforceable across EU Member states
Article 38 of the current Regulation provides that a judgment must be declared enforceable in the Member State in which it is being enforced, following an application governed by the law of the Member State in which enforcement is sought.
Article 39 of the new Regulation abolishes this rule by providing that ’a judgment given in a Member State which is enforceable in that Member State shall be enforceable in the other Member States without any declaration of enforceability being required’.
This is a dramatic and hugely beneficial change which will reduce costs and delay and improve the ease with which judgments can be enforced between Member States. There are of course safeguards to this new Article found in Article 45 and 46, for instance recognition of a judgment shall be refused if it is ’manifestly contrary to public policy‘ or ’where the judgment was given in default of appearance, if the defendant was not served with the document…’.
4. Jurisdiction agreements are treated as separable from the substantive contract
Article 25(5) of the new Regulation provides that a jurisdiction agreement is to be treated as independent of the other terms of the contract. This broadly reflects the current English law position. The practical effect of this means that the validity of the jurisdiction agreement cannot be challenged solely on the basis that the contract is invalid.
The new Regulation is long overdue and appears to be commercially and practically beneficial, particularly in terms of reducing the negative impact created by the West Tankers decision. It remains to be seen in practice what improvements the new Regulation will have on the speed and ease with which judgments can be arrived at and then enforced within the EU. However, in principal, costs and delay should be drastically reduced.