Committee reports on proposals for Brussels regulations

27 July 2009

The House of Lords EU Committee has today published a report on the European Commission’s Green Paper on the operation of the European Community Regulation on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters.

The Committee broadly welcomes the Commission’s review of the Regulation but highlight the need for broader and closer analysis of legal issues, which although technical, have considerable practical "ramifications for London’s role as a centre for international legal dispute resolution."

The Committee points out that English law takes a flexible approach to the exercise of jurisdiction over cases which are basically concerned with non-European issues and over defendants based outside Europe. They suggest that the operation of the Regulation needs reconsideration in relation to the former, and that, if the Regulation is extended to cover the latter, caution will be needed about introducing inflexible rules. They propose that it may only be appropriate to agree minimum, rather than maximum, bases for the exercise of such jurisdiction.

The Committee welcomes the proposal to abolish exequatur, i.e. the need to obtain a court order before enforcing a foreign judgment, but argue that safeguards will need to be put in place to forewarn defendants that a foreign judgment is to be enforced against them.

The Committee strongly supports the efforts in the Green Paper to reform lis pendens - the principle that aims to avoid concurrent court proceedings in different Member States by giving priority to the first court before which proceedings are brought. While agreeing that parallel proceedings should be avoided, the Committee is concerned that current arrangements promote ‘the torpedoing’ of choice of court and arbitration clauses, by enabling parties to such clauses who commence proceedings in another forum to avoid or delay the commencement of proceedings against themselves in the chosen forum. The Committee argues that any reform should "discourage the use of tactical pre-emptive claims and … enable the appropriate court to hear proceedings." It suggests allowing a chosen court to proceed and to have priority to decide on jurisdictional issues.

The Committee also encourages steps to ensure that arbitration clauses are not torpedoed by the commencement of court proceedings, and suggest that the court of the seat of arbitration should decide on jurisdictional issues.

Commenting Lord Mance, Chairman of the House of Lords EU Sub-Committee on Law and Institutions, said:

"We are pleased that the European Commission has decided to look at Brussels I. This is an area that, while broadly successful, has needed reform, and, although the proposals need some working through, the Commission are to be congratulated on grappling with the important issues which its operation and interpretation have thrown up.

"We are concerned to have a practical and effective system regulating jurisdiction in a way which does not undermine commercial expectations or, of course, imperil London’s position as a world centre for international dispute resolution.

"Above all, we encourage the Commission in its aim to address the problems and abuses that arise from the ability of parties under current jurisprudence to ‘torpedo’ the commencement of proceedings in a chosen jurisdiction, since this affects the viability of choice of court and arbitration clauses. We also encourage them to address, with caution, the relationship between Europe and the rest of the world in relation to the exercise of jurisdiction."

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