Documents considered by the Committee on 5 November 2014 - European Scrutiny Committee Contents

13 Hague Convention (Choice of Court Agreements)

Committee's assessment Legally important
Committee's decisionCleared from scrutiny

Document detailsDraft Council Decision on EU approval of the Hague Convention on Choice of Court Agreements
Legal baseArticle 81(2) in conjunction with the first subparagraph of Article 218(6) TFEU; consent; QMV
DepartmentMinistry of Justice
Document numbers(35776), 5445/14 + ADD 1, COM(14) 46

Summary and Committee's conclusions

13.1 The 2005 Hague Convention on Choice of Court Agreements was signed by the EU on 1 April 2009 on the basis of the Council Decision 2009/397/EC.[69] Its main purpose is to increase legal certainty for parties involved in international "business-to-business" contracts (and thereby promote international trade) by providing uniform rules which ensure that exclusive "choice of court" agreements are respected and that judgments issued by designated courts can be recognised and enforced in the courts of other Contracting Parties. The Convention takes precedence over the jurisdiction rules of Brussels I[70] (which govern choice of court agreements and recognition and enforcement of judgments within the EU) except if both parties are EU residents or come from third states, not Contracting Parties to the Convention. The Commission considers that the reduced scope of Brussels I is an acceptable trade-off for the increased legal certainty and autonomy that will benefit EU companies engaged in trade with third country parties.

13.2 The current document provides for EU approval of the Convention which would then bind all EU Member States. Given the benefits of increased legal certainty to UK business, the Government was minded to participate in the Council Decision and it notified the EU of its opt-in decision (notwithstanding EU external competence) on 30 April. Accordingly, we asked the Government to seek to ensure the transparency of UK opt-in rights by means of appropriate wording in recitals. We also sought clarification over the position of insurance contracts and consistency of that position with Brussels I rules; the Government has been seeking the inclusion in the Decision of all insurance contracts (and not just reinsurance contracts) in line with UK insurance industry preference.

13.3 In our Thirteenth Report of 2014-15, we reported the Government's account of progress on the text prior to the JHA Council of 9-10 October and its response to the previous questions we had raised. It told us that the applicability of the opt-in had not been made transparent by a recital in the text but that instead it was intending to enter a minute statement on the Council record concerning its participation in the measure. It also reported that some insurance contracts remain excluded from the Decision (to ensure consistency with Brussels I rules and the exclusion of consumer contracts under the Hague Convention itself). However, the scope of the original exclusion proposed had been narrowed through UK efforts and an annex had been added to the effect that the EU might reassess the need for an exclusion in the future. Despite these outstanding points, the Government maintained that adopting the text and Convention would still be in the UK's best interests. The next step was for Member States to agree at the JHA Council to send the text to the European Parliament for its consent, as provided under the Article 218(6) TFEU procedure.

13.4 As the Government now explains, that agreement at the 9-10 JHA Council resulted in a scrutiny override, because of a misunderstanding at officials' level, realised prior to the Council meeting, of how the scrutiny reserve resolution applied to the Article 218(6) process. Mindful of that, the Government tried "to protect the integrity of the UK parliamentary scrutiny process" by sending a formal note to other EU delegations to the effect that although the scrutiny reserve still applied, the Government was minded to agree to send the text to the European Parliament. The Government now asks the Committee to reconsider its decision to continue holding the document under scrutiny "once the European Parliament has made its decision".

13.5 We thank the Minister for the prompt and full explanation he provides in his letter of the circumstances of the scrutiny override. On this occasion, we recognise that the override resulted from a genuine misunderstanding. Given this and the overall diligence of his department in handling scrutiny of this document, we do not propose to take the issue any further. That said, we cannot accept that notifying other delegations at the Council meeting of the continuing application of the scrutiny reserve had the effect of preserving the integrity of our scrutiny reserve; in the circumstances, only abstaining would have so done.

13.6 Given that the European Parliament has no power other than to give (or refuse) its consent to the text, we see no point in deferring a decision on whether to clear this document from scrutiny until its decision is known. We are therefore content to now clear this document from scrutiny.

Full details of the document: Proposal for a Council Decision on the approval on behalf of the European Union of the Hague Convention of 30 June 2005 on Choice of Court Agreements: (35776), 5445/14 + ADD 1, COM(14) 46.

Background and previous scrutiny

13.7 Our previous scrutiny of the current document is set out in Forty-fourth Report of 2013-14 and our First and Thirteenth Reports of 2014-15.

Minister's letter of 25 October 2014

13.8 The Parliamentary Under-Secretary of State for Justice (Mr Shailesh Vara) first addresses the question of the opt-in:

    "I am pleased to note the Committee's comments in respect of the efforts the Government has made to reflect the interests of the UK in the final text. I share the Committee's disappointment that further progress has not been able to be made to assert the UK's opt-in in the wording of the recitals. As I said in my letter of 18 September, we will make a minutes statement on adoption of the Proposal to reflect our belief that the UK's opt-in applies, notwithstanding exclusive competence."

13.9 He then provides an explanation of the Government's position at the October JHA Council. He starts with an apology for "mistakes" that were made "in relation to the scrutiny process".

    "My officials had understood, on the basis of what we now accept was a mistaken reading of the scrutiny reserve resolution, that the process of agreement of the text and referral was simply a procedural step, and that political agreement, as set out in the terms of the scrutiny reserve resolution, would take place only after the European Parliament had given its consent.

    "With that in mind, the Government indicated in advance of the Council, by means of a formal note to other EU delegations, that the Parliamentary scrutiny reserve continued to apply, but that we were minded to agree to send the text to the European Parliament for its consent. My officials had understood that would protect the integrity of the UK Parliamentary scrutiny process.

    "I accept that, since the European Parliament can only accept or reject the text referred to it, agreement by the Council to refer the text to the Parliament meant that the text itself takes on a form that was not capable of revision by the Parliament. I recognise that triggers the scrutiny reserve resolution.

    "I hope the Committee will accept that this was an honest misunderstanding on the part of my officials, in the context of an unusual European legislative procedure, and that there was no deliberate intention on the part of the Government to override UK Parliamentary scrutiny. Having taken advice from your Committee's Clerk and Legal Adviser, as well as the Cabinet Office, my officials are now clear about the course to be adopted in such cases.

    "An 'A' Point was submitted in advance of the meeting, and, in Council, the item was taken en bloc with a number of other 'A' points, which went through with no active discussion, as is the usual process."

13.10 He next considers the question of ongoing scrutiny:

    "The Committee has said that it may be prepared to reconsider the scrutiny reserve following a Government report back after first reading. The position is that the European Parliament is being asked to give its consent to the text as it stands, so there will be no trilogue and hence no first reading procedure.

    "In the circumstances I would be grateful if the Committee would consider the question of the scrutiny reserve afresh, once the European Parliament has made its decision. I will, of course, keep the Committee informed about progress and about the likely timescale for final adoption of the Proposal."

Previous Committee Reports

First Report HC 219-i (2014-15), chapter 18 (4 June 2014); Forty-fourth Report HC 83-xxxix (2013-14), chapter 8 (26 March 2014).

69   OJ No. L 133, 29.5.09, p.1, also available from: Back

70   Council Regulation No. 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters. This was recast by Regulation No. 1215/2012 of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters. Back

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Prepared 18 November 2014