Ireland: The Recast Brussels I Regulation – Changes For EU Cross-Border Litigation

Since 1968, the Brussels Convention, later the 2001 Brussels I Regulation, has played an important role in determining jurisdiction and how judgments are recognised and enforced in cross-border civil and commercial proceedings within the EU. The Regulation has undergone a recent spring clean and the Recast Brussels I Regulation applies from 10 January 2015.

While general principles remain largely the same, the Recast Regulation seeks to make EU cross-border litigation more efficient, widens its scope, and addresses a tactic defendants use to delay cross-border litigation. Some highlights of the Recast Regulation are set out below.

Location, Location, Location...

The 2001 Brussels I Regulation's (the "Regulation") general principles regarding jurisdiction are preserved in the The Recast Brussels I Regulation (the "Recast Regulation"). The general principle remains that parties may mutually agree, by written agreement, which EU jurisdiction will hear disputes between them. If there is no jurisdiction agreement, generally, and subject to certain exceptions, defendants may be sued in the courts of their domicile.

Another principle that remains, but which has been altered, is that once proceedings are initiated in an EU Member State, any court in another EU Member State subsequently seised of the same matter must postpone proceedings. In recent years, parties have exploited this 'first-in-time' principle with a tactic called the 'Italian Torpedo'. Article 31(2) of the Recast Regulation now seeks to address this practice in particular circumstances.

The Italian Torpedo involves a party to a dispute taking advantage of the 'first-in-time' principle by quickly applying to have a matter heard in an EU jurisdiction where the court process is slow. The effect of this is that the matter may be delayed while that court determines whether or not it has jurisdiction to deal with the matter. Before the introduction of the Recast Regulation, this tactic could even work to stall applications in an EU jurisdiction nominated by parties by a jurisdiction agreement, often frustrating the other party's efforts to get a ruling.

Article 31(2) of the Recast Regulation seeks to prevent Italian Torpedo applications from succeeding where a jurisdiction agreement is in place between the parties. Article 31(2) gives priority to the EU jurisdiction chosen in any such jurisdiction agreement. Therefore, an EU court where an Italian Torpedo application has been made must now postpone proceedings to allow the court of the EU jurisdiction chosen by the parties to deal with the matter.

Passport Control for EU Judgments

The old process for recognising and enforcing judgments, called the Exequatur Procedure, was criticised for being slow and expensive. Articles 37 and 42 introduce a simpler system. Parties can now apply to have a judgment from another EU Member State recognised and / or enforced by presenting a copy of the judgment, a certificate in a prescribed format and translations if necessary.

Casting the Net Beyond the EU

The Recast Regulation has significantly widened the net of EU jurisdiction to non-EU entities. The main areas of expansion are described below.

Article 21.2 provides that an employee can sue an employer in the jurisdiction where he habitually works, even if the employer is not from or based in the EU.

Articles 17 and 18 provide that a consumer can sue a non-EU entity in the consumer's EU Member State of domicile where the non-EU entity pursues commercial or professional activities in the consumer's EU Member State.

Article 25 of the Recast Regulation removes the requirement that one party must be domiciled in the EU for a jurisdiction agreement nominating an EU Member State to be recognised. Article 25 allows parties with no connection to the EU to nominate an EU Member State by a jurisdiction agreement.

What of Arbitration?

The Recast Regulation copper-fastens the exclusion of arbitration from its scope.
Certain actions relating to arbitration procedure, recognition and enforcement are now expressly excluded.

Article 73(2) of the Recast Regulation provides that the main legal framework for arbitration, the New York Arbitration Convention on the Recognition and Enforcement of Foreign Arbitral Awards, takes precedence over the Brussels regime.

Comment

The new rules under the Recast Regulation are significant for EU cross-border litigation. They endeavour to make the recognition and enforcement of cross-border litigation more efficient and they seek to address the delays which resulted from Italian Torpedo applications in certain circumstances.

Non-EU entities should note the rules now recognise jurisdiction agreements made between them that elect an EU jurisdiction. They should also bear in mind the changes regarding employment and consumer contract cases.

The new rules only apply to proceedings instituted after 10 January 2015 so it may take some time before the Recast Brussels I Regulation has a real effect on EU cross-border litigation.

For more information, please contact a member of our Dispute Resolution team.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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