Home / Events / Thwarting Torpedoes along with other Clarifications: Recast The city Regulation in Pressure From 10 The month of january 2015

Thwarting Torpedoes along with other Clarifications: Recast The city Regulation in Pressure From 10 The month of january 2015

Thwarting Torpedoes along with other Clarifications: Recast The city Regulation in Pressure From 10 The month of january 2015

Among the relatively unsung success tales from the Eu (and it is predecessors) is its experiment in judicial co-operation. The very first major element of this experiment was the 1968 The city Convention on Jurisdiction and also the Enforcement of Judgments in Civil and Commercial Matters. The The city Convention was updated, and partially replaced, by Council Regulation (EC) No 44/2001 on jurisdiction and also the recognition and enforcement of judgments in civil and commercial matters. Regulation 44/2001 (now known as the “Original The city Regulation”) continues to be recast by Regulation (EU) No 1215/2012 from the European Parliament as well as the Council on jurisdiction and also the recognition and enforcement of judgments in civil and commercial matters (known as the “Recast The city Regulation”).

For individuals coping with transactions and disputes across borders in Europe, these fundamental bits of legislation address two essential issues: which EU courts have jurisdiction, and just how judgments in one Member Condition could be recognized and enforced in another Member Condition. Additionally they discuss many other options that come with worldwide disputes including, for instance, the connection between arbitration and litigation and also the validity of court selection clauses.

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March 2015 LW.com
Thwarting Torpedoes and Other Clarifications: Recast
Brussels Regulation in Force From 10 January 2015

By Oliver Browne

One of the relatively unsung success stories of the European Union (and its predecessors) is its
experiment in judicial co-operation. The first major component of this experiment was the 1968
Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial
Matters. The Brussels Convention was updated, and partly superseded, by Council Regulation (EC)
No 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial
matters. Regulation 44/2001 (now referred to as the “Original Brussels Regulation”) has been
recast by Regulation (EU) No 1215/2012 of the European Parliament and of the Council on
jurisdiction and the recognition and enforcement of judgments in civil and commercial matters
(referred to as the “Recast Brussels Regulation”).
For those dealing with transactions and disputes across borders in Europe, these fundamental pieces
of legislation address two very important issues: which EU courts have jurisdiction, and how
judgments from one Member State can be recognized and enforced in another Member State. They
also touch on a number of other features of international disputes including, for example, the
relationship between arbitration and litigation and the validity of court selection clauses.
The Recast Brussels Regulation entered into force on 10 January 2015. The changes it introduces
are relatively limited. Set out below are details of the most important:
• Abolition of exequatur: The Recast Brussels Regulation has simplified the system for enforcing
judgments across Member States, and has reduced costs and delays, by abolishing exequatur.
This was an intermediate procedure required by the Original Brussels Regulation as part of the
enforcement process whereby judgments were formally recognized before they could be
enforced. The Regulation now also promotes the use of standard forms to facilitate the
recognition and enforcement of foreign judgments by the competent authorities.
• Extension of the jurisdiction rules in the Regulation to disputes involving defendants who
are not domiciled in an EU State: The Original Brussels Regulation contains jurisdiction rules
which are mainly applicable if defendants are domiciled in Member States. The Recast Brussels
Regulation applies those rules to non-EU defendants, allowing those defendants to be sued within
the EU in certain circumstances — for example, in the case of certain insurance, consumer and
employment contracts.
Latham & Watkins In Practice Newsletter | March 2015 | Page 2
• Changes to the lis pendens rules: Under the Old Brussels Regulation, it was possible to
commence so-called “torpedo” actions (see the European Court of Justice decision in Gasser
(Erich) GmbH v MISAT Srl C-116/02 [2005] QB 1, [2005] 1 All ER (Comm) 538). In “torpedo”
actions, claims are deliberately brought in slow moving Courts in breach of exclusive jurisdiction
clauses. This strategy could potentially delay proceedings, as the court selected in the jurisdiction
clause was obliged to stay proceedings before it until the court first seized determined whether it
had jurisdiction. The Recast Brussels Regulation now says that proceedings in breach of
exclusive jurisdiction clauses must be stayed until the court selected in the jurisdiction clause
determines whether it has jurisdiction. This change hopefully will significantly reduce “torpedo”
actions and forum shopping.
• Arbitration exception: Another significant change relates to the nature of the “arbitration
exception” (i.e. the provision expressly excluding arbitration from the scope of the Recast
Brussels Regulation), which had been heavily debated. The changes are generally supportive of
arbitration, and the primacy of the New York Convention, and address some of the difficulties
following the ECJ’s decision in Allianz SpA v West Tankers Inc (Case C-185/07). In that case, an
anti-suit injunction from the court of the seat of arbitration aimed at preventing litigation in another
Member State was held to be contrary to the Brussels Regulation. Now, the Recast Brussels
Regulation clarifies that the Courts of Member States should not be prevented from referring
parties to arbitration, from staying or dismissing proceedings in favour of arbitration, or from
examining whether the arbitration agreement is null and void, inoperative or incapable of being
performed. However, the wide-ranging reforms initially proposed have not fully materialized and
some have criticized the Recast Brussels Regulation for not going far enough.
• Court selection clauses: The Recast Brussels Regulation expressly states that court selection
clauses are separable agreements on jurisdiction and will be treated as independent of the other
terms of the contract in which they are contained. The validity of court selection clauses cannot
now be contested solely on the ground that the contract is not valid. Court selection clauses now
fall within the Recast Brussels Regulation more easily: the requirement that the parties to
agreements containing such clauses must include at least one party domiciled in a Member State
has been removed. This means that the domicile of the parties becomes less relevant and that
parties can more easily establish whether the Recast Brussels Regulation applies. However, the
requirement that the court selection clause selects a Member State court remains in place (so if a
non-Member State court is selected, the relevant court selection clause falls outside the
Regulation).
On balance, the Recast Brussels Regulation fine tunes an already successful piece of legislation and
the changes discussed above are not wide-ranging and should be welcomed. However, there is some
sense that an opportunity was missed by the regulators, particularly in relation to the scope of the
arbitration exception, to provide even more clarity and certainty.

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