After much debate in legal circles, the UK Government has finally decided to opt into the European Commission's controversial new Regulation on jurisdiction - a rewrite of the familiar Brussels I Regulation EC 44/2001 (replacing the Brussels Convention 1968) that has governed jurisdiction in the EU for the last nine years.
For some time there has been general agreement that the Regulation in its present form does not serve litigants well, in particular by allowing so-called 'torpedoes' (pre-emptive proceedings in inappropriate jurisdictions) as a tactic to delay litigation and frustrate jurisdiction agreements. The position has not been helped by the Court of Justice issuing a string of judgments taking an inflexible approach to the text of the Regulation and, more recently, muddying the waters as to its scope (see Allianz SpA v West Tankers Inc (Case C-185/07), in which the Court undermined the 'arbitration exception' under Article 1(2)(d)).
The revised Regulation is a mixed blessing for litigants who want to use the English courts. Although jurisdiction agreements will be bolstered, the grounds on which the courts can accept jurisdiction absent any agreement will be considerably narrowed. This will have an effect, in particular, where disputes concern documents that do not traditionally include jurisdiction agreements (eg letters of credit) and where parties might previously have relied on an explicit choice of English law when asking the English courts to try a dispute.
The revised Regulation is also notable for expanding the scope of the Regulation to cover disputes where the defendant is not domiciled in an EU Member State - an ambitious broadening of its scope which will be technically difficult to pull off. Previously many disputes that fell into this category were subject to national conflicts of laws principles, which in England and Wales meant common law rules allowing the courts a wide discretion when deciding whether or not to accept jurisdiction in individual cases. The new Brussels I Regulation, like the old, is conceived as a set of rules that operate quasi-automatically and give the courts the opportunity to exercise their discretion only in strictly limited circumstances.
The detailed wording of the new Regulation is still being negotiated, and the opt-in ensures that the UK will play a full role in the drafting process.
The Regulation in its final form is likely to come into force in three to four years' time.