4 Recognition and enforcement of
judgments in civil and commercial matters
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18101/10
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COM(10) 748
| Draft Regulation on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast)
Commission staff working paper — Impact Assessment
Commission staff working paper — Summary of Impact Assessment
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| Legal base | Articles 67(4) and 81(2)(a),(c) and (e) TFEU; co-decision; QMV
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| Document originated | 14 December 2010
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| Deposited in Parliament | 22 December 2010
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| Department | Ministry of Justice
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| Basis of consideration | EM of 21 December
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| Previous Committee Report | None; but see (30610) 9149/09 and (30569) 9150/09: HC 19-xviii (2008-09), chapter 12 (3 June 2009)
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| To be discussed in Council | No date set
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| Committee's assessment | Legally important
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| Committee's decision | For debate in European Committee B; further information requested
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Background
4.1 This proposal concerns the repeal and replacement of Regulation
(EC) No 44/2001 of 22 December 2001 (known as the Brussels I Regulation)
on jurisdiction and the recognition and enforcement of judgments
in civil and commercial matters. The proposal is accompanied by
an impact assessment, together with a summary of that assessment.
4.2 The Brussels I Regulation replaced the Brussels
Convention. It came into force on 1 March 2002 and applies to
all Member States of the European Union with the exception of
Denmark, which does not participate in measures adopted under
Title IV of the Treaty establishing the European Community.[20]
Denmark has concluded a separate agreement with the European Community,
the effect of which is to extend the Regulation's rules to Denmark.
4.3 The Regulation lays down uniform rules to
settle conflicts of jurisdiction and facilitate the mutual recognition
and enforcement of judgments, court settlements and authentic
instruments within the EU in civil and commercial matters. It
also includes rules to assist courts in settling jurisdictional
matters.
4.4 The preamble to the Regulation states many
of its policy aims and objectives. It is designed to contribute
to the continued development of an area of freedom, security and
justice and to the "sound operation of the internal market".
The regime aims at facilitating the mutual recognition of judgments
in civil and commercial matters through a system of highly predictable
jurisdictional rules which are generally based on the defendant's
domicile. The regime established by the Regulation is founded
upon a principle of "mutual trust in the administration of
justice" between Member States.
4.5 Article 73 of the Regulation places an obligation
on the European Commission to present a report on the application
of the Regulation within five years. In May 2009, the European
Commission published this report, which was accompanied by a Green
Paper. [21]
In overall terms, the report concluded that the Regulation had
generally been a success, facilitating cross-border litigation
through the application of uniform jurisdiction rules, including
rules to regulate parallel proceedings, and rules to ensure the
circulation of judgments. However, the report also concluded that
there was a need for improvement in certain specific areas. These
included the following:
- the abolition of exequatur
in the context of the international recognition and enforcement
of judgments;
- the operation of the Regulation in the broader
international legal order;
- the operation of choice of court clauses;
- intellectual property;
- rules governing lis pendens and related
actions;
- provisional measures;
- the interface between the Regulation and arbitration
proceedings; and
- other issues, covering scope, jurisdiction, recognition
and enforcement.
4.6 The Green Paper sought views on ways to improve
the operation of the Regulation in these areas by the end of June
2009. It is as a result of this report and responses to the Green
Paper that this proposal is made.
Legal basis and opt-in
4.7 The legal basis for this proposed Regulation
is Article 67(4) in conjunction with Article 81(2)(a), (c) and
(e) of the Treaty on the Functioning of the European Union (TFEU).
This concerns measures in the field of judicial co-operation in
civil matters having cross border implications under Title V TFEU.
Under the United Kingdom's opt-in Protocol, it need not participate
in the adoption of the proposed Regulation unless it elects to
do so. The Government has launched a consultation on whether the
UK should opt into the proposal, with a deadline for responses
of 11 February. The Minister says of the decision to opt-in:
"In deciding whether to opt in to the proposal,
the Government's position will be informed by the results of its
consultation. Without prejudice to that consultation, the Government
recognises the importance to both businesses and citizens of the
current Brussels I Regulation. It also recognises that some of
the Commission's proposals would constitute significant improvements
to it, notwithstanding that there are some issues of concern that
will need to be resolved during the negotiations."[22]
The document
4.8 Chapter I
of the proposed Regulation deals primarily with the scope of the
instrument in its general application in "civil and commercial
matters", subject to various specific exclusions in areas
which in general either are, or will fall, within the scope of
other EU Regulations, such as insolvency and wills and succession.
4.9 Chapter II
contains the Regulation's rules of jurisdiction with Section 1
setting out the general jurisdictional rules. The main rule in
Section 1 is Article 2 which reflects the principle that jurisdiction
should generally be based on the domicile of the defendant in
a Member State. Section 2 provides additional special grounds
of jurisdiction. Those set out in Articles 5 and 6 reflect either
the subject matter of the dispute (e.g. whether the claim is in
contract or tort) or some other special characteristic of the
dispute (e.g. jurisdiction in relation to counterclaims or co-defendants).
4.10 Sections 3, 4 and 5 of Chapter II provide
alternative jurisdictional regimes in relation to certain categories
of contract where it is considered that the rules of jurisdiction
need to favour the weaker party (i.e. certain insurance, consumer
or employment contracts). In such cases the weaker party, for
example a consumer, is generally entitled to sue in the Member
State where he or she is domiciled and the possibility for the
parties to select a jurisdiction to resolve their dispute is severely
limited. Section 6 provides certain grounds of exclusive jurisdiction
(with the result that, where these apply, no other ground of jurisdiction
is generally available). These grounds reflect the special subject
matter of the dispute which makes it desirable that the courts
of one Member State alone should be entitled to hear the dispute.
They are mainly designed to cover certain issues arising out of
disputes in the following areas: immoveable property, company
law; or intellectual property law issues.
4.11 Section 7 provides for commercial parties
in certain circumstances to agree on a jurisdiction which should
be exclusively competent to determine future disputes between
them. The commercial importance of this jurisdiction is clear
in view of the need for legal certainty for both parties in the
event of any such dispute. Section 8 is new and results from the
Commission's analysis of the Brussels I Regulation. On the basis
of that analysis, the Commission proposes that the rules of jurisdiction
in the proposed Regulation should be extended to apply to a defendant
where he or she may be domiciled outside the EU. The consequence
of this extension of EU jurisdiction will be to exclude the application
of the grounds of jurisdiction currently available under the national
laws of the Member States. The grounds proposed under this Section
relate to the location of moveable property in a Member State
and a forum necessitatis for cases where it would not be
reasonable to require a claimant to sue in a third State.
4.12 Section 9 contains rules imposing certain
obligations on national courts when determining jurisdiction under
the Regulation, in addition to cases where the defendant fails
to enter an appearance. Section 10 provides rules to deal with
situations involving concurrent court proceedings which have been
brought either in different Member States or in a Member State
and a third State. There is also a rule to regulate cases where
there are competing proceedings before a court and an arbitral
tribunal. Section 11 creates jurisdiction in relation to provisional,
including protective, measures.
4.13 Chapter III
sets out the procedures for the international recognition, enforceability
and enforcement of judgments. Section 1 provides for the recognition,
throughout the EU, of judgments obtained in a Member State. In
doing so, this generally abolishes the requirement for exequatur
(the need to obtain a declaration of enforceability in the Member
State where recognition is sought). Section 2 provides the rules
for the enforcement, throughout the EU, of judgments obtained
in a Member State. The applicant, seeking enforcement, is required
to supply various documents to the enforcement authorities and
those authorities are required to refuse enforcement in certain
circumstances. Provision is also made for enforcement to be made
conditional in certain cases, for example on the provision of
security by the applicant. Section 3 contains certain common provisions.
In particular provision is made, in certain circumstances, for
a review of a judgment given in default of the appearance of the
defendant in the Member State of origin (Article 44) and in other
cases in the Member State of enforcement where enforcement would
be denied on the basis of a breach of the fundamental principles
underlying the right to a fair trial (Article 45).
4.14 Chapter IV
provides for the enforcement of authentic instruments and court
settlements whilst Chapter V contains general provisions
which cover a variety of matters: for example, the place of domicile
of individuals (Article 54) and the place of domicile of companies
and other legal persons (Article 55). Chapter VI
contains transitional provisions. Of particular note here is the
continued application of the exequatur requirement established
under the Regulation as a precondition to recognition in two types
of case: first, judgments arising out of violations of privacy
and rights relating to personality, including defamation; and
secondly, certain judgments obtained by or on behalf of multiple
claimants on the basis of unlawful business practices. There are
also provisions dealing with conventions to which the Member States
are parties (Articles 63, 64, 65, 66 and 67). Chapter VIII
contains the proposed Regulation's final provisions.
The Government's view
4.15 The Secretary of State for Justice (Mr Kenneth
Clarke) deposited an Explanatory Memorandum dated 21 December
2010, which sets out in detail the Government's current thinking
on this proposal.
SUBSIDIARITY
4.16 The Government is satisfied that the proposed
Regulation in broad terms complies with the principle of subsidiarity.
This reflects the fact that its subject matter is generally already
covered by the Brussels I Regulation. However the Government is
reflecting further as to whether there is a subsidiarity issue
in relation to the proposed extension of the scope of the Regulation
to cover parties who are not domiciled in the EU.
IMPACT ON UNITED KINGDOM LAW (INCLUDING IMPLEMENTATION
ISSUES)
4.17 The Minister says that impact of the proposed
Regulation on the current law in the United Kingdom would be significant.
Not only would it have a considerable impact to the extent that
the law currently reflects the Brussels I Regulation, but the
addition of the proposed extension of the rules of EU jurisdiction
to defendants domiciled outside the EU would preclude the operation
of the current rules of jurisdiction in this area as they currently
apply in the UK. The most significant aspects of the proposed
Regulation's impact are discussed in outline in the section below
dealing with the proposal's policy implications.
POLICY IMPLICATIONS
4.18 The Minister says that the many detailed
policy implications of the proposed Regulation are the subject
of a consultation exercise by the Government. Accordingly, the
Government's assessments of the implications of the amendments
being suggested to the Regulation are necessarily preliminary
in nature: they are subject to the results of that consultation
and further detailed consideration of the text of the provisions
proposed by the Commission.
4.19 The following are the principal changes
envisaged in the proposed Regulation, together with the Government's
preliminary assessment in relation to each of them:
Provisions to abolish in general the intermediate
procedure for the recognition and enforcement of judgments (exequatur),
with the exception of judgments in defamation and related cases
and certain judgments given in collective proceedings
4.20 The Government supports, in principle, the
abolition of exequatur as it has the potential to reduce unnecessary
delay and costs for litigants. However, such abolition should
not simply remove the existing protections for defendants which
exist under the current Brussels I Regulation in relation to the
international enforcement of judgments. In this context the Government
welcomes in principle the remedies proposed by the Commission
which should remain available to defendants, in particular as
regards the following cases:
- where the defendant was not
properly informed about the original proceedings,
- where there were procedural defects in the original
proceedings which may have infringed a defendant's right to a
fair trial; and
- where the judgment is irreconcilable with another
judgment issued either in the Member State where enforcement is
sought or, in certain circumstances, in another country.
4.21 Whether these proposed remedies for defendants
are fully adequate is an issue which the Government will continue
to assess, together with the proposed retention of exequatur for
defamation cases and certain multi-claimant cases. In this context
the Government is reflecting on three specific issues. The first
is the appropriateness of requiring defendants to litigate only
in the Member State of origin on those issues which concern the
failure to provide them with information about the proceedings,
rather than enabling those issues, along with all the other alleged
breaches of the safeguards, to be determined by courts in the
Member State of enforcement. The second issue concerns the proposed
deletion of the current safeguard of public policy in so far as
that safeguard relates to substantive as opposed to procedural
issues. The Government questions whether such a deletion is appropriate
in cases where the issue relates to substantive public policy
as expressed in national or EU legislation, for example in a case
involving the interests of consumers. The third issue is whether
the proposed Regulation's different approach to defamation and
related claims is justified and, on the basis that such a justification
reflects the absence of harmonised EU choice of law rules in relation
to such claims, whether further exceptions should perhaps also
be made for other matters where such harmonised rules do not currently
exist (for example in the field of real property).
Provisions to extend the jurisdiction rules of
the Brussels I Regulation to disputes involving defendants domiciled
outside the EU, including regulating situations where the same
issue is pending before a court inside and outside the EU
4.22 In principle, the Government remains to
be persuaded of the need to extend the current jurisdiction rules
to cover disputes involving defendants domiciled outside the EU.
It continues to believe that, as opposed to unilateral harmonisation
in this area at the EU level, such issues would be better resolved
through multilateral negotiations at the Hague Conference on Private
International Law.
4.23 The Government is also carefully considering
whether the legal base in Article 81 TFEU allows for such regulation
of defendants not domiciled in the EU.
4.24 A possible compromise solution, which the
Government could support, would be to allow the Member States
to retain their current national grounds of jurisdiction, notwithstanding
that this would be accompanied by some partial harmonisation of
jurisdiction at EU level in respect of defendants domiciled outside
the EU.
4.25 If as a result of the forthcoming negotiations
on the Regulation, it is agreed that the Commission's proposal
to extend the jurisdiction to defendants domiciled outside the
EU is accepted, the Government would support the proposed Articles
25 and 26 which create new grounds of jurisdiction in relation
to moveable property and, in the interests of justice, a forum
necessitatis for claimants who would otherwise be deprived
of an adequate forum outside the EU in which to litigate their
disputes.
4.26 An important consequence of the proposed
uniform extension of jurisdiction to cases involving "third
country domiciliaries" is that the many national grounds
of jurisdiction currently established under the laws of the United
Kingdom would no longer be available. The Government is giving
careful consideration to which, if any, of these national grounds
should in some form be retained under the revised Regulation.
This is essential in order to ensure that the interests of claimants
are protected and that no jurisdictional lacuna is created as
a result of the Commission's proposed extension of jurisdiction.
4.27 Another consequence of this approach is
that the ambit of the protective rules of jurisdiction relating
to insurance (contained in Articles 8 to 14 of the proposed Regulation)
would be extended to situations where a defendant is domiciled
outside the EU. In line with the current Brussels I Regulation,
these provisions would apply in certain cases to insured parties
acting in a commercial capacity. This would mean that the possibilities
for commercial parties to make valid choice of court agreements,
already restricted for cases falling under the Brussels I Regulation,
would now be further restricted in cases where the defendant in
the case is domiciled outside the EU. The Commission's approach
on this issue is inconsistent with the 2005 Hague Convention on
Choice of Court Agreements and the principle of party autonomy
which underpins that instrument. The Government will want to ensure
that whatever is agreed in the adopted Regulation is in the best
interests of the United Kingdom's insurance industry and its world-wide
interests or in the interests of the UK as a forum of choice for
litigating international commercial disputes.
4.28 A further consequence of the Commission's
approach to jurisdiction is that, in the absence of any provision
to the contrary, it would be likely to preclude entirely the operation
of the procedural discretion known as forum non conveniens,
a valuable mechanism deployed by courts in the United Kingdom
to ensure the transfer of cases which would be more appropriately
dealt with by the courts in another jurisdiction. The European
Court of Justice's (ECJ's) decision in Owusu v. Jackson[23]
has already achieved this result for cases falling within
the scope of the current Brussels Regulation and the proposed
comprehensive scheme of EU jurisdiction would complete that process
of exclusion.
4.29 In this context the Government welcomes
in principle Article 34 which establishes a discretionary lis
pendens rule where there are concurrent proceedings in the
court of a Member State and the court of a non-Member State. However,
in view of the fact that the courts of a non-Member State will
not be operating a jurisdictional regime equivalent to that which
operates within the EU, this provision needs to be reformulated
in more flexible terms by analogy with Article 30, on related
actions, and without the requirement that a court in a non-Member
State must necessarily have been seized first.
4.30 The Government welcomes the Commission's
decision not to propose uniform rules to regulate, within the
EU, the recognition and enforcement of judgments coming from non-Member
States. This matter will continue to be regulated by national
law.
Provisions to enhance the effectiveness of choice
agreements
4.31 The Government welcomes the proposal that
a court in a Member State, chosen by the parties to resolve their
dispute, should always have priority to do so regardless of whether
that court was first or second seized. This addresses the problems
of cost, delay and legal uncertainty caused by the ECJ's decision
in Gasser.[24]
The resolution of this issue is an important priority for the
Government. It is also supported by the European Parliament.
4.32 The Government also welcomes the Commission's
proposal for a harmonised conflict of law rule on the substantive
validity of choice of court agreements. Such a rule is to be welcomed
as it reflects the rule in the 2005 Hague Convention on Choice
of Court Agreements, the ratification of which the Government
supports. This will also have the benefit of removing an issue
of legal uncertainty which exists under the current Brussels I
Regulation.
Provisions regulating the interface between the
Regulation and arbitration
4.33 The Government shares the stated objectives
of the Commission in the area of arbitration, namely the need
to enhance the effectiveness of arbitration agreements within
the EU, to prevent parallel court and arbitration proceedings
and to eliminate the incentive for abusive litigation tactics.
These objectives reflect the commercial importance of arbitration
and the problems generated by the ECJ's decision in West Tankers.[25]
4.34 However, in seeking to achieve these objectives,
the Government notes that the Commission has not adopted the approach
which the UK advocated at the Commission's Green Paper stage,
namely the reinforcement of the current exclusion of arbitration
from the scope of the Brussels I Regulation in order to remove
the entirety of the arbitral process from the scope of the Regulation.
4.35 The Commission proposes that a court seized
of a dispute should be obliged to stay its proceedings on the
basis that certain conditions are fulfilled:
- where such proceedings contravene
an arbitration agreement, and
- where either an arbitral tribunal has already
been seized of the dispute or that court proceedings have commenced
in the Member State where the arbitration has its seat.
4.36 At this stage the Government wishes to reserve
its position on this proposal. It intends to consult extensively
among the arbitration community before expressing a view. One
factor which the Government will weigh carefully is the extent
to which the Commission's proposal would be likely to create problems
by reference to the scope of EU competence in this area.
Provisions relating to the co-ordination of proceedings
before the courts of Member States
4.37 Various proposals are put forward under
this heading. Whilst the Government is sympathetic to the proposal
to improve the general lis pendens rule by prescribing
a time limit within which the court first seized must decide on
its jurisdiction, it is not supportive of the proposal that there
should be an exchange of information by the courts seized of the
same matter. Such a mechanism is unlikely to have any significant
value in practice and could well lead to additional delay and
expense for the parties. The Government is supportive of the proposal
that in relation to the consolidation of related actions the technical
and unduly restrictive requirement that consolidation must be
possible under national law should be abolished.
4.38 On provisional measures, the Government
notes in particular the proposal that provisional measures ordered
by a court without jurisdiction under the Regulation as to the
substance of the dispute should not circulate such measures within
the EU for recognition and enforcement purposes. This is contrary
to the position under the current Brussels I Regulation and, pending
consultation on its practical implications, the Government reserves
its position at this stage.
Provisions relating to access to justice
4.39 The Government supports many of the proposals
made under this heading. In particular it supports the creation
of a jurisdiction for claims relating to rights in rem
at the place where moveable assets are located. This would be
an appropriate jurisdiction as the courts in that jurisdiction
should in principle have control over that property. This might
be particularly useful in relation to claims for the recovery
of leased moveable assets, such as aircraft. The Government also
supports the proposal to permit the possibility of bringing actions
against multiple defendants in the employment area, thus remedying
the situation which arose in ECJ case of Glaxosmithkline[26]
(as the weaker parties in such litigation employees should be
able to consolidate their claims in this situation). Finally,
the Government is also supportive of the proposal to enable commercial
parties to conclude choice of court agreements for disputes concerning
the tenancy of office space (which is currently prohibited under
the Brussels I Regulation because of the exclusive jurisdiction
in relation to disputes involving real property). Such agreements
should be permitted in accordance with the general principle of
party autonomy between commercial entities.
REGULATORY IMPACT ASSESSMENT
4.40 The Government is currently preparing an
impact assessment on the proposed Regulation to accompany its
consultation with stakeholders. This seeks input from interest
groups on whether it would be in the national interest for the
Government to seek to opt in to the Regulation.
FINANCIAL IMPLICATIONS
4.41 The Government's impact assessment seeks
input from interest groups in determining the potential costs
and benefits of opting in or, as the case may be, not opting in
to the Regulation. The Government's initial assessment is that
any costs associated with the Regulation are likely to be merely
those associated with its implementation. A final assessment will
be made of these costs and benefits at the conclusion of the negotiations.
CONSULTATION
4.42 The Government intends to consult widely
among interest groups from various sectors, including the judiciary,
practitioners and academics. This consultation will relate both
to the United Kingdom's opt in decision and thereafter throughout
the negotiations on the proposed measure. The Government aim to
publish their consultation document shortly.
TIMETABLE
4.43 The Government anticipates that the Hungarian
Presidency will arrange regular Council working group meetings
in order to start negotiations on this proposal. It is expected
that, in view of the importance of the subject matter, the subsequent
Polish Presidency will take forward negotiations through the working
group as a matter of priority in the second half of 2011. The
proposal is not expected to be agreed before the end of 2012 at
the earliest.
Conclusion
4.44 We thank the Minister for his extremely
helpful Explanatory Memorandum on the proposal to repeal and replace
the Brussels I Regulation. We note that, in relation to the decision
whether to opt-in, the Government recognises the importance to
both businesses and citizens of the current Brussels I Regulation;
that it also recognises that some of the Commission's proposals
would constitute significant improvements to it, notwithstanding
that there are some issues of concern that will need to be resolved
during the negotiations; but that this view is subject to the
conclusions the Government draws from the consultation exercise
it is carrying out.
4.45 We think this proposal is legally very
significant, and so, in line with the Government's Written Ministerial
Statement of 20 January 2011, we recommend that the decision whether
to opt into it be debated in European Committee B.
4.46 Before this debate takes place we would
be grateful if the Minister could send us an overview of the responses
to the consultation his Department has received. Meanwhile the
document remains under scrutiny.
20 Pre-Lisbon Treaty terminology. Back
21
See headnote: (30610) 9149/09 and (30569) 9150/09: HC 19-xviii
(2008-09), chapter 12 (3 June 2009) Back
22
See paragraph 26(7) of the Explanatory Memorandum. Back
23
C-281/02. Back
24
C-116/02. Back
25
C-185/07. Back
26
C-462/06. Back
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