At the end of last year, the European Commission published its proposals for the reform of the Brussels Regulation. The Ministry of Justice (MoJ) has published a consultation, Review of the Brussels I Regulation – How should the UK approach the negotiations, seeking views on whether it would be in the UK's interests to opt in and apply the revised Brussels Regulation in the terms proposed by the Commission.

The proposals include draft amendments to introduce improvements to the relationship between the Regulation and arbitration. They include keeping the arbitration exception and making provision for a stay of court proceedings where the question of arbitral jurisdiction is before either the courts or an arbitral tribunal. The Commission’s proposals ignore the UK’s response to the Commission’s consultation, which recommended a reinforcement of the current exclusion of arbitration by removing the entirety of the arbitral process from the scope of the Regulation.

The MoJ consultation reiterates its concerns following the European Court of Justice’s (ECJ) decision in West Tankers, which reduced the scope of the exclusion of arbitration from the Regulation. The ECJ held that the grant of anti-suit injunctions restraining a party from commencing or continuing with proceedings in the court of a Regulation member state, where those proceedings are in breach of an arbitration agreement, is incompatible with the Regulation. The Commission’s proposals mean that, whenever a court characterises the subject matter of a claim brought before it as a matter within the scope of the Regulation, any issue as to the existence, scope or validity of an arbitration clause is a preliminary issue. This would give any party wishing to escape an arbitration clause carte blanche to select its preferred court to decide this issue.

The MoJ is also concerned about the Commission’s proposed extension of the current rules of jurisdiction to cover disputes involving defendants domiciled outside the EU. The ECJ’s decision in Owusu v Jackson has already excluded the operation of forum non conveniens in cases falling within the current Regulation. It held that, where jurisdiction is conferred by Article 2 because the defendant is domiciled in a member state, the court cannot decline jurisdiction on the ground that the court of a non-member state would be a more appropriate forum. The proposed scheme would preclude entirely the operation of forum non conveniens under English law.

A further consequence of the extension of the existing restrictive rules would be to extend the ambit of the protective rules of jurisdiction relating to insurance to situations where a defendant is domiciled outside the EU. The possibilities for commercial parties to insurance contracts to make valid choice of court agreements between themselves, already restricted for cases falling under the Regulation, would become further restricted in cases where defendants are domiciled outside the EU.

The deadline for responses is 11 February 2011