BRUSSELS CONVENTION
(21778)
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Draft Council Regulation on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters.
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| Legal base:
| Article 61(c) EC; consultation; unanimity
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| Document originated:
| 26 October 2000 |
| Forwarded to the Council:
| 26 October 2000 |
| Deposited in Parliament:
| 14 November 2000 |
| Department: |
Lord Chancellor's |
| Basis of consideration:
| EM of 13 November 2000
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| Previous Committee Report:
| None; but see (20188) 7700/99: HC 34-xxv (1998-99), paragraph 2 (7 July 1999)
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| To be discussed in Council:
| 30 November 2000 |
| Committee's assessment:
| Legally important |
| Committee's decision:
| Cleared |
Background
25.1 On 27 September 1968 the Member States,
acting under what is now Article 293 EC, concluded the Brussels
Convention on jurisdiction and the recognition and enforcement
of judgments in civil and commercial matters. The Brussels Convention
has been amended on a number of occasions so as to provide for
the accession of new Member States and to make other amendments.
(It was amended in 1978 on the accession of the United Kingdom,
Denmark and Ireland, in 1982 on the accession of Greece, in 1989
on the accession of Spain and Portugal and most recently in 1996
on the accession of Austria, Finland and Spain). The Convention,
as so amended, has been given effect in the law of the United
Kingdom by the Civil Jurisdiction and Judgments Act 1982.
25.2 In 1988 the Member States concluded
the Lugano Convention with the then Member States of EFTA. The
Lugano Convention adopts the principles of the Brussels Convention,
so that the two Conventions produce a largely uniform regime for
civil jurisdiction and the recognition and enforcement of judgments
in EU and EFTA states.
25.3 At a meeting in December 1997 the Council
agreed to the creation of an ad hoc Working Group comprising
representatives from both the EU Member States and the Lugano
countries (Switzerland, Norway and Iceland) to consider a revision
of the Brussels and Lugano Conventions. The Working Group produced
a revised consolidated text of proposed amendments to the two
Conventions in 1999.
25.4 At a JHA Council meeting on 28 May
1999, the Council agreed to the proposed amendments and 'froze'
them pending a proposal from the Commission for a Community Act
to replace the Brussels Convention, which would incorporate the
Working Group's proposals. (In 1993 it became possible for Conventions
on judicial co-operation in civil matters to be based on Title
VI TEU. With the entry into force of the Treaty of Amsterdam judicial
co-operation in civil matters now falls within Title IV EC[89]).
25.5 We reported on the Note by the Working
Group in July 1999[90],
when we considered that the amendments were for the most part
uncontroversial. We invited the Ministers to clarify their views
on the amendments to Article 13 (consumer contracts). We referred
to criticism that the amended Article 13, which made it easier
for a consumer to bring proceedings in his own State of domicile
without being forced to do so in the State of the seller's domicile,
would deter small and medium-sized companies from using the Internet.
In his letter of 28 September 1999 the Parliamentary Secretary
at the Lord Chancellor's Department (Mr Keith Vaz) explained that
Article 13 allowed a consumer to bring proceedings before a court
in the country where he lives and that "the intention of
Member States was to make it clear that e-commerce transactions,
including those involving websites, come within Article 13."
25.6 We also asked the Ministers whether
the Government intended to exercise its option under Title IV
to take part in the adoption and application of the proposed Community
Act, and to explain what consequences they expected from the change
in nature of the Brussels Convention from an international convention
to Community legislation. In his letter of 29 September 1999 the
Minister said that the Government did not expect the European
Court to interpret any Community regulation which replaced the
Brussels Convention in a significantly different way from that
in which it has hitherto interpreted the Convention.
25.7 The Minister added that there were
two respects in which the replacement of a convention by a Community
regulation would produce significant changes. The first concerned
the power of national courts to refer questions of interpretation
to the European Court. Under the Brussels Convention[91]
references may be made, not only by national supreme courts, but
also by national courts "where they are sitting in an appellate
capacity". Under Article 68 EC references in respect of Title
IV measures may be made only "in a case pending before a
court or tribunal of a Member State against whose decision there
is no judicial remedy under national laws". The Minister
explained that in the United Kingdom this would mean that in the
great majority of cases references would only be possible from
the House of Lords and that consequently "it would be [significantly]
more difficult for litigants to make references to the Court of
Justice and thereby secure conclusive rulings" on the interpretation
of Community legislation which replaced the Brussels Convention.
25.8 Finally, the Minister explained that
the second significant change concerned the extension of external
Community competence which would result from the replacement of
the Brussels Convention. It was likely to be the case that after
the adoption of internal Community rules in a Community measure
replacing the Brussels Convention the Community would be exclusively
competent to conclude international agreements with third countries
in this field whenever such agreements could affect the internal
Community rules.
The document
25.9 The document is an amended Commission
proposal for a Regulation on jurisdiction and the recognition
of and enforcement of judgments in civil and commercial matters.
The Regulation will operate between the Member States of the EU,
but as this is a Title IV measure, it will not apply in Denmark.
The Brussels Convention will continue to apply in cases concerning
Denmark.
25.10 The draft Regulation incorporates
the amendments to the Brussels Convention which were agreed at
the JHA Council on 28 May 1999 and reproduces the substance of
the Convention in the form of a Regulation.
The Government's view
25.11 In his Explanatory Memorandum of 9
November, the Parliamentary Secretary at the Lord Chancellor's
Department (Mr David Lock) describes the agreed amendments to
the Brussels Convention as 'relatively minor and technical' and
'although useful are generally uncontroversial'. He explains the
amendments in more detail as follows;
"(i) Article
5(1): an amendment to the ground of jurisdiction in contractual
matters to make specific provision as to the place of performance
in relation to contracts for the sale of goods and supply of services;
other types of contract will remain subject to the present rule.
"(ii) Article 15: amendments
to the grounds of jurisdiction in consumer contracts; the general
thrust of these amendments is to make it somewhat easier for a
consumer to bring proceedings in the State of his domicile.
"(iii) Articles 18 to 21:
new provisions relating to employment contracts; these are designed
to create jurisdictional protection for employees broadly similar
to that which the Conventions already provide for consumer and
insurance contracts.
"(iv) Article 30: this
new provision establishes a single uniform date as to when a
court in a Member State has jurisdiction in relation to a
particular case for the purpose of the provisions in the Convention
dealing with concurrent proceedings (Articles 27 to 29): the present
rule is confusingly that this date is governed by the relevant
national law.
"(v) Article 41(2): this
provides for a failure to serve the defendant with proceedings
in the State of origin to be a ground for a refusal to recognise
or enforce a foreign judgment; it is to be amended so that it
strikes a fairer balance between the legitimate interests of the
parties — at present the balance unfairly favours the defendant.
"(vi) Articles 34 to 53:
the principal change in these provisions dealing with enforcement
is to ensure that the first stage in the enforcement process,
namely the issue of a declaration of enforceability, follows automatically
once a creditor presents the enforcing court with the required
documents (including a certificate issued by the court of origin)
and cannot be resisted at that stage on any of the grounds for
refusal laid down in the Regulation. A defendant will effectively
be required to establish the case for non-enforcement and this
should speed up the enforcement process.
"(vii) Article 57: a new autonomous
definition of the domicile of companies and other legal persons
which closely follows our present definition under section 43
of the Civil Jurisdiction and Judgments Act 1982".
25.12 The Explanatory Memorandum also discusses
the various amendments made to the original proposal which have
been put forward by the European Parliament. The first group of
such amendments concerns specific provisions applicable to the
United Kingdom and Ireland, following the decision by these countries
to 'opt in' to this Title IV measure. These have been accepted
by the Commission, and the Explanatory Memorandum considers that
'it is correct that these provisions, which relate to common law
matters, such as trusts, should be inserted into the Regulation'.
25.13 The proposal by the European Parliament
that authentic instruments should be treated in the same way as
judicial decisions for the purpose of automatic recognition has
been rejected on the grounds that enforcement of such instruments
is already provided for in the Regulation (Article 54) and that
it is unnecessary to provide for their recognition.
25.14 The proposal by the European Parliament
that the jurisdictional protection given to policy holders, the
insured and beneficiaries under Article 9 should be confined to
individual insurance contracts, has not been accepted and the
text originally agreed in the Council in May 1999 has been re-instated.
25.15 Further consideration has been given
to the provisions relating to consumer transactions (Article 15)
constituting or involving e-commerce. The thirteenth recital to
the draft Regulation (which stated that "electronic commerce
in goods or services by a means accessible in another Member State
constitutes an activity directed to that State") would have
increased considerably the scope for consumers to sue in the courts
of their own domicile in any case involving a contract made through
a website. We drew attention to the criticism that this might
affect the ability of small and medium-sized companies to engage
in e-commerce in the EU and note that the recital has now been
deleted. A consumer will therefore be able to sue in the courts
of his own domicile in any case where the contract is concluded
with a person who "pursues commercial or professional activities"
in that Member State or who "by any means directs such activities
to that Member State". The Explanatory Memorandum comments
that
"This result has been
generally accepted by the Brussels Working Group. Its effect has
been to remove the element in the package of consumer provisions
which e-commerce traders were most concerned about and to leave
intact the provisions on consumer transactions agreed by the Council
in May 1999".
25.16 The Explanatory Memorandum points
out that one consequence of replacing the Brussels Convention
with a Regulation is that its adoption would establish external
Community competence in the areas covered by the Regulation, so
that Member States would lose their existing rights to conclude
agreements with third States which could affect the operation
of the Regulation. In particular, the Regulation would contain
no equivalent of Article 59 of the Convention which allows Member
States to conclude agreements with third States not to enforce
judgments given against those domiciled in those third States
by courts in other Member States and based on national exorbitant[92]
grounds of jurisdiction available in those Member States and which
would otherwise be enforceable in all Member States by virtue
of Article 4. The Commission has taken the view that Article 59
is inconsistent with external competence and cannot properly be
included in the Regulation.
25.17 The Ministers comment as follows:
"The Government is concerned
about such a development, particularly in relation to the continuing
negotiations at the Hague Conference of Private International
Law for a world-wide judgments agreement, but has not yet decided
whether in the light of that concern to agree the adoption of
the Regulation. Further consideration is being given to possible
ways in which the application of external Community competence
might be alleviated if the Regulation is nevertheless adopted".
25.18 Finally, the Minister again draws
attention to the fact that a consequence of the adoption of the
Regulation will be a restriction on the power of national courts
to refer questions of interpretation to the European Court, so
that for the United Kingdom references will only be possible —
in the great majority of cases — from the House of Lords.
Conclusion
25.19 We thank the Minister for his helpful
Explanatory Memorandum. We agree that the amendments to the Brussels
Convention which have now been incorporated in the draft Regulation
are, for the most part, uncontroversial and helpful.
25.20 We note the treatment of jurisdiction
over consumer contracts concluded in the course of e-commerce
and agree that transactions involving internet websites should
not automatically give rise to a right of the consumer to sue
in his own domicile, but only in those cases where commercial
or professional activities are directed towards the State where
the consumer is domiciled.
25.21 We observe that little of substance
for the free movement of judgments appears to be secured by the
conversion of the Brussels Convention (to which all Member States
are party) to a Regulation which will not apply to all Member
States. We share the concerns expressed by the Minister over the
conferring of external Community competence in this field, and
will look to the Minister to devise ways in which the consequences
of this development might be alleviated, particularly in view
of the forthcoming negotiations in The Hague for a world-wide
judgments agreement.
25.22 On the basis that these ways of
alleviating the effect of conferring external competence will
be actively pursued up to and including the Justice and Home Affairs
Council later this month, we are content to clear the document,
but we would be grateful in due course for the views of the Minister
as to how far the concerns have been met.
89 Article 61(c) and 65 provide for measures in the
field of judicial co-operation in civil matters having cross-border
implications, insofar as necessary for the proper functioning
of the internal market. Back
90 (20188)
7700/99: see headnote to this paragraph. Back
91 Article
2 of the1971 Protocol on the interpretation by the Court of Justice
of the Convention of 27 September 1968. Back
92
That is, a ground of jurisdiction which would not normally be
recognised under the general principles of private international
law common to most States. An example in the United Kingdom is
the case where jurisdiction depends solely on the service of process
on a defendant during his temporary presence in a part of the
United Kingdom. Back
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