Background

On 10th January 2015 EU Regulation 1215/2012 (the Recast Regulation) comes into force across the EU. The Civil Jurisdiction and Judgments (Amendment) ( Scotland) Regulations 2015 make provision for the adoption of the Recast Regulation in the UK. In Scotland, changes to the Rules of Court are expected and are being considered by the Scottish Civil Justice Council in order to give effect to the new law.

The Recast Regulation, an update on Regulation 44/2001, makes significant changes to the law in two key areas: the determination of civil jurisdiction within the EU and enforcement of judgments between member states. Many of the basic principles of the 2001 Regulation are retained i.e. it is still the case that an EU domiciled person should usually be sued in the place of his domicile. However, the Recast aims to remedy some of the difficulties that have been encountered with the 2001 Regulation in practice.

This e-update highlights the issue of exclusive jurisdiction clauses which will be of particular relevance to anyone involved in commercial contracts. A more detailed examination of other aspects of the reforms can be found on our website.

Exclusive Jurisdiction Clauses

The Recast Regulation makes some sensible reforms to the law in relation to exclusive jurisdiction clauses. Article 25 of the Recast Regulation provides that where parties have agreed that a particular court will have jurisdiction over any disputes this court will have jurisdiction regardless of the domicile of the parties. This will apply even where none of the parties are EU-domiciled. This reduces the potentially costly need to consider the domicile of each party to the contract and the possibility that different rules may apply to different parties.

However, an exclusive jurisdiction clause will not be upheld where it is null and void as to its substantive validity under the law of the member state. The Recast Regulation specifically provides that the question of whether the agreement is null and void should be determined with reference to the law of the member state designated in the agreement.

The Recast Regulation also provides that an exclusive jurisdiction clause is separate from the contract as a whole. This means that, if it is argued that a contract is invalid, any exclusive jurisdiction clause can still apply and it will therefore be clear which court is entitled to resolve the dispute.

Conclusion

Jurisdictional issues are often a significant source of contention for parties who are involved in cross-border litigation. The Recast Regulation provides some much needed clarity in this area and it is likely that commercial parties will wish to take advantage of the enhanced strength of exclusive jurisdiction clauses within the EU.

Disclaimer

The material contained in this article is of the nature of general comment only and does not give advice on any particular matter. Recipients should not act on the basis of the information in this e-update without taking appropriate professional advice upon their own particular circumstances.