Jurisdiction, recognition and enforcement

Practitioners concerned with international litigation need to be aware of the Community law rules on the jurisdiction of the civil courts and the recognition and enforcement of judgments delivered by those courts.  These rules are shortly to be subject to the most comprehensive reform since their inception in 1968.  Here, the Scottish Executive sets out the major implications of the changes.

Regulation 44/2001 (known as the “Brussels I Regulation”) which will come into force on 1 March 2002 will replace the 1968 Brussels Convention (and the broadly parallel 1988 Lugano Convention), applying to all the Member States of the European Union (except Denmark which remains subject to the 1968 Convention).

The Brussels Regulation and the 1968 Convention

Although the general principles underlying the 1968 and 1988 Conventions will continue to operate under the Regulation, some significant changes have been made:

Contract jurisdiction

Article 5(1) of the Regulation provides a ground of jurisdiction in contractual matters. The rule applying under the Regulation differs from its equivalent in the Convention, as it is now subject to the qualification that the place of performance is (unless the parties agree otherwise) given a uniform Community definition for contracts for the sale of goods and contracts for the provision of services – that is, the place where, under the contract, the goods/services were delivered/services provided, or should have been delivered/provided.

Concurrent proceedings

The European Court of Justice (ECJ) decision in Zelger v Salinitri [1984] ECR 2397 (national law applies to the question of when a national court is first seized of the proceedings) has been the subject of criticism as it has meant that national courts have to assess complex foreign rules of procedure, adding to costs and delays.  Under Article 30 of the Regulation a new test establishing a Community definition of the moment when a court is seized is set down.  The first limb of this rule establishes a uniform date where proceedings are initiated by the document instituting proceedings being lodged with the court – provided that the pursuer then takes the necessary procedural steps to serve that document on the defender.  This is designed to protect a defender from a pursuer acting in bad faith (for example, by instituting proceedings for a negative declaration to establish his non-liability in one jurisdiction merely to delay the other party starting proceedings in some other jurisdiction).  The second limb applies where proceedings are initiated when the relevant document is handed to the authority responsible for its service, such as the huissier in France and only when the document has been served on the defender can legal process issue from the court.  In these cases, the pursuer is required to take the necessary steps to lodge the document with the court so that legal process can then be issued.  This is also designed to protect defenders from pursuers acting in bad faith.

Enforcement

Under article 34 of the Regulation, a judgment from another Member State is to be declared enforceable immediately on completion of the formalities required (Article 53) and there is no basis for refusing such a declaration under the grounds for refusal in Articles 34 and 35.  Thus, it will no longer be possible for courts, at a preliminary stage, to scrutinise judgments to consider whether they should of their own motion rule that, for example, the judgment offends against public policy and must therefore be denied recognition.  This has not been the general practice of UK courts, but this is not the universal practice among all Member States – and even where there are no grounds for refusal, the mere fact of an investigation has led to undesirable delays. The effect of Article 34 should be to assist judgment creditors in the UK in the enforcement of their judgments in the other Member States.

The power to refer cases to the European Court of Justice

Under the Regulation, the entitlement of supreme courts and other appellate courts to request preliminary rulings from the ECJ on the interpretation of the Convention, has been curtailed.  Now references to the ECJ on the interpretation of the Regulation will only be possible from a national court “against whose decisions there is no judicial remedy under national law”.  In the UK this will generally only be the House of Lords.

Other changes

These include the following:

• the delict jurisdiction in Article 5(3) includes threatened wrongs;
• the jurisdiction in relation to co-defenders in Article 6(1) has been amended to codify the relevant jurisprudence of the Court of Session;
• minor tidying up of the provisions on jurisdiction in insurance matters (Articles 9(2) and 14);
• some amendments to the protective jurisdiction available in relation to consumer contracts (Articles 15 to 17) (guidance on the effect of these amendments will shortly be available on the Department of Trade and Industry’s website: www.dti.gov.uk);
• a new section on the protective jurisdiction available in relation to individual employment contracts (Articles 18 to 21);
• a revised exception to the exclusive jurisdiction of the place where immovable property is situated in cases involving short term tenancies (Article 22);
• minor changes to the exclusive jurisdiction over legal persons (Article 22);
• an express statement in the provision on choice of court agreements (Article 23) that parties can choose to give non-exclusive jurisdiction to the courts of a Member State and a provision on agreements entered into by electronic means;
• clarification of the meaning of the provision on related actions (Article 23(2));
• jurisdiction based on submission to the jurisdiction of a court of a Member State amended to codify the relevant jurisprudence of the Court of Justice (Article 24);
• a new autonomous definition of the domicile of legal persons (Article 60).

This Order in Council will come into force on 1 March 2002 and makes changes to the existing law in the UK, as a consequence of the commencement of Regulation.  Schedule 1 to the Order has been modelled on Part I of the Civil Jurisdiction and Judgments Act 1982 – the latter applying in relation to the 1968 Convention, and the former applying only as regards the Regulation.  It is likely that the 1982 Act will be replaced whenever a further Regulation between those States covered by the Brussels I Regulation and Denmark is agreed on.

Schedule 2 of the Order makes amendments to the 1982 Act to apply certain provisions in the 1982 Act for the purposes of the Regulation (for example, sections 24 and 25 on interim relief); to bring Schedule 4 of the 1982 Act (allocating jurisdiction between the three UK jurisdictions), broadly into line with the Regulation; to bring Schedule 8 of the 1982 Act (on jurisdiction where the Brussels and Lugano Conventions, and Schedule 4 of the 1982 Act did not apply), broadly into line with the Regulation; to clarify the relationship between the Regulation, the 1968 Convention and the 1988 Lugano Convention.

Schedule 3 makes various minor consequential amendments to various statutory provisions.

In general terms, Schedule 4 models the intra-UK rules of jurisdiction on the equivalent rules in the Regulation, so that generally the same rules will operate internally as within the EU. An exception to this has been made for Article 5(1) on jurisdiction in contractual matters as it is thought likely that this new provision may generate uncertainty, at least in the period immediately following commencement.  As this provision is particularly important for commercial transactions where the consideration of certainty has special weight, it has been decided to retain, for internal purposes, the equivalent of Article 5(1) in the 1968 Convention.  This will be kept under review.

Similarly, Schedule 8 models the Scottish rules of jurisdiction on the Regulation where deemed appropriate. Again an exception was made in the case of Article 5(1) of the Regulation and the Scottish Executive will be keeping this matter under review.  Most of the amendments to Schedule 8 are of a minor nature but attention should be drawn to the addition of Rule 2(9) (reflecting Article 7 of the Regulation) detailing jurisdiction over the limiting of liability for actions relating to shipping, and Rule 3(6)(c) (reflecting Article 17(3) of the Regulation), giving added flexibility for consumers.

It is also worth noting that, as with the Convention, the provisions in the Regulation on concurrent proceedings, related actions and insurance contracts are not replicated in either Schedule 4 or 8.  The provisions on prorogation in these Schedules remain different and neither fully follows the provisions on prorogation in Article 23.

The Civil Jurisdiction and Judgments (Authentic Instruments and Court Settlements) Order 2001

This Order applies certain provisions in the Civil Jurisdictions and Judgments Order to authentic instruments and court settlements made in the other Member States which are bound by the Regulation. As under the Convention, such instruments and settlements are enforceable in the same manner as court judgments. This Order follows the same approach as was adopted by the Order made in 1993 (S.I.1993/603) in relation to the 1982 Act.

Amendments to the Rules of Court

Various minor and technical amendments will be made to the Rules of Court to take account of the changes brought about by the Order in Council.  These Rules are not available at the time of writing but it is anticipated they will be in force prior to the commencement of the Regulation on 1 March 2002.

Copies of the Orders in Council and the Brussels I Regulation can be obtained via the Stationery Office (www.hmso.gov.uk - S.I. 2001/3929, S.I. 2001/3928).  The Brussels I Regulation can also be obtained via the European Union website (www.europa.eu.int).