From 10 January 2015, Regulation (EU) 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Brussels Regulation (recast)) applies.
The most significant change in relation to jurisdiction, and this clearly also effects parties not from Member States, is that a jurisdiction agreement will be binding, providing that the court specified in the jurisdiction agreement is in a Member State, even if none of the parties is.
- Enforcement of Judgments
Enforcement of judgments of one country to which the Regulation applies is now simpler. Instead of a registration procedure, the judgment creditor simply has to produce a copy of the judgment which satisfies the conditions necessary to establish its authenticity and a certificate in a form set out in the recast regulation.
- Disabling the torpedo
Previously, any court other than the court first seised had to decline jurisdiction, until such time as the court first seised decided whether or not it had jurisdiction. The court first seised was the court in which the proceedings had first been issued, where proceedings were issued in the court of more than one country.
Under the recast regulation, the court which has jurisdiction under a contract can continue its proceedings, even if it is not the court first seised and any other court has to stay its proceedings until the court seised under the agreement has declared that it does not have jurisdiction.
If a court not in a Member State would have jurisdiction under its own rules, torpedo litigation can still be commenced. This would not affect the continuation of the proceedings in the court agreed in the contract, but is an added inconvenience and expense.
Matters for lawyers to consider
- Jurisdiction clauses
Hybrid jurisdiction clauses, for example in a loan agreement, are likely to cause problems. These are provisions where, for example, the borrower submits to the jurisdiction of the courts in the country of the lender, but the lender reserves the right to sue in any other court which has jurisdiction. It is unclear whether such provisions are “exclusive” for the purpose of the new rule. It may be that they are binding on the party which can only bring proceedings in the agreed jurisdiction, and not on the other party who is permitted to sue elsewhere. The rule cannot apply to non-exclusive jurisdiction clauses, as the parties to such agreements have clearly agreed that the jurisdiction of other courts may be invoked.
It is also unclear to what extent a non-chosen court would have to apply a test to determine jurisdiction, bearing in mind the recast regulation, which would not have direct effect in that country.
Parties may wish to examine their current contracts and will wish in future contracts to take advantage of exclusive jurisdiction clauses to take advantage of the new rule.
It is not clear how the precedence of the New York Convention over the recast regulation will operate in practice. Again, there will, no doubt, be litigation to resolve issues such as what happens if there is an arbitral award and a conflicting court judgment.
The law of unintended consequences will apply to the change in the rules, and only litigation will clarify what happens in the case of the current known unknowns, as well as the unknown unknowns which will almost certainly arise.
About Steven Loble
Steven is an international commercial litigator and foreign judgment enforcement specialist who works for Sherrards Solicitors in London. View Steven’s profile.