Brussels Regulation v Brussels Convention

INTRODUCTION
The Brussels Regulation is Council Regulation No 44/2001 of 22 December 2000 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters1 (hereinafter referred to as "the Regulation"). The Regulation aims to revise the Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (1968) (hereinafter referred to as "the Convention"). The Commission's explanatory memorandum to its proposal for this Regulation is as follows, "The form chosen for the instrument-a regulation-is warranted by a number of considerations. The Member States cannot be left with the discretion not only to determine rules of jurisdiction, the purpose of which is to achieve certainty in the law for the benefit of individuals and economic operators, but also the procedures for the recognition and enforcement of judgments, which must be clear and uniform in all Member States. Moreover, transparency is a vital objective in this context; it must be possible to come to an immediate uniform understanding of the rules applicable in the Community without the need to seek the provisions of national law that transpose the context of the Community instrument, bearing in mind that national law will very often be foreign to the plaintiff. And opting for a Regulation enables the Court of Justice to ensure that it is applied uniformly throughout the Member States." It is clear therefore that the principal objectives of the Brussels Regulation is to promote certainty, transparency and uniformity within the European Community. Inherent in this explanation is a failure of the Brussels Convention to achieve the stated objectives and an indication that the Brussels Regulation remedies such failure(s). The critical issue is whether or not the Regulation does in fact achieve this.

BRUSSELS REGULATION v. BRUSSELS CONVENTION
1. The fundamental principles of the Regulation are the same as that of the Convention. ARTICLE 1 which deals with the scope of the Regulation is identical to the Convention. The general rule on jurisdiction that a Defendant should be sued in the courts of his domicile contained in ARTICLE 2, remains unchanged. Thus the position is the same as it was under the Convention, the determination of domicile of an individual is a matter for the national laws of each Member State 2 . However, the Regulation attempts to clarify the position of companies, legal persons or associations of natural or legal persons by defining their domicile in ARTICLE 60. The purpose of this is to "Europeanize" the applicable definitions. This would lend itself to clarity and uniformity of application within the European Community.
2. The general rule on jurisdiction can be displaced in certain circumstances where special jurisdiction rules apply. ARTICLE 5 of both the Convention and the Regulation detail situations where special jurisdiction rules would be applicable. Of particular interest is ARTICLE 5(1) which deals with "matters relating to a contract", both sets of provisions say that "the courts for the place of performance of the obligation in question" will have jurisdiction. It is at this point that the Convention and the Regulation part ways. The Regulation sets out two criteria with respect to determining "place of performance": (i) for the sale of goods: where the goods were delivered or should have been delivered and (ii) for the provision of services: where the services were provided or should have been provided.

The Convention left "place of performance" to be determined by Private International Law. This would inevitably lead to the application of the appropriate foreign law, each country would have its own substantive national laws to apply to this issue. In such a process the costs will be high because of the need for foreign counsel and further complications would arise with respect to choice of law rules. The Regulation attempts to remedy the complexity and uncertainty of the old provision by providing explicit definitions ('Euro-definitions') with a view to simplifying and harmonizing the process. However, this amendment is not without its own shortcomings, no definition is given for "contract for the provision of services" for the purposes of ARTICLE 5(1)(b). This may result in references to the Court of Justice, who in turn will have regard to EU Regulations/Directives or to the common core of the law of Member States. This takes us right back to where we were pre-Regulation i.e. subject to the rules of Private International Law as was the case under the Convention.
There are some commentators who do not feel that the Regulation improves the situation at all but in fact it makes it worse 3 . The essence of the objection is that quite often the obligation in question is not the failure to deliver or to provide services but the failure to pay. The payment obligation may be due in another State and therefore the jurisdiction of the courts of the place of delivery or provision of services appears questionable. However, the counter argument to this objection is that even if the place of payment is different to the place of delivery ARTICLE 5(1)(b) still applies. The obligation in question in this provision is a delivery/provision of services obligation and quite often an action for non-payment is tied to a breach of such obligation. It appears that in theory the Regulation improves the situation for matters relating to a contract, whether this is the case in practice remains to be seen.
3. ARTICLE 5(3) which deals with special jurisdiction in matters relating to tort is amended in the Regulation to deal with threatened wrongs by the inclusion of the words "may occur". This is intended to address situations where the injury/harm has not yet occurred but will unless dealt with. In such cases the party who may suffer harm can seek an injunction to prevent another person from doing that which will cause harm, breach of intellectual property rights is an example of such a situation. The inclusion of this is an expansion of the provision to deal with the widening ambit of the law of tort and to bring the Regulation in line with modern trends and developments, bearing in mind that the Convention dates back to 1968.
4. There is also special jurisdiction for consumer contracts. ARTICLE 13(3)(a) and (b) of the Convention has been replaced by ARTICLE 15(1)(c) of the Regulation. According to the Convention, the consumer's jurisdiction will apply when the contract concerned is: (a) preceded by a specific invitation addressed to him or by advertising and (b) the consumer took in that State steps necessary for the conclusion of the contract. The Regulation removed the second qualification (b) in its entirety, by doing this it addressed a shortcoming of that provision, the shortcoming being that the consumer fell outside of the protection offered by this provision if he was induced to leave his domicile by the other party in order to conclude the contract. ARTICLE 13 of the Convention was also ill-equipped to deal with eCommerce and website contracts since it is practically impossible to evaluate where a consumer takes the steps necessary for the conclusion of the contract.

ARTICLE 15(1)(c) of the Regulation states that the consumer's jurisdiction will apply when: (a) the other party (a business) pursues commercial or professional activities in the Member State of the consumer or (b) such party directs such activities to that Member State or several States including that one. Therefore, under the new provision a UK consumer who purchases goods while visiting Italy will now be able to sue in the courts of his domicile, the UK, if the other party (who may or may not be Italian) pursued or by any means directed his activities to the UK. This provision was specifically drafted with eCommerce in mind but it is not clear whether it will have the desired effect of making the position with respect to jurisdiction in internet contracts any better. What is meant by "directs such activities to that Member State or to several States"? There are no rules or case law (yet) to answer this question. However, the Council and the Commission issued a Joint Statement4 on, inter alia, ARTICLE 15 in which is stated "that for Article 15(1)(c) to be applicable it is not sufficient for a undertaking to target its activities at the Member State of the consumer's residence…a contract must also be concluded within the framework of its activities...the mere fact that an Internet site is accessible is not sufficient for Article 15 to be applicable…" Again the practical usefulness of this statement is limited, it will be a matter for the Court of Justice to judicially interpret what constitutes "directs such activities to that Member State…". While such a provision is welcome in the year 2002 it lacks the clarity, certainty and transparency to make it administratively workable on its own. It will become functional only after references are made to the Court of Justice and there is confidence in the meaning and ambit of this provision. Thus, apart from bringing the Regulation into modern times it does no more.
It should be noted that this provision also impacts on more traditional commercial dealings such as newspapers. An English newspaper which contains local business advertisements may be distributed in Italy and such businessmen may find themselves subject to the provisions of ARTICLE 15(1)(c)5 . However the protection given by this new provision is not practical, no one will litigate for relatively small amounts of money. This option is too expensive and time-consuming. Consumer cases, especially international consumer contracts should be dealt with by more flexible options such as arbitration or regulatory means of preventing crime/fraud/misrepresentation on the internet.
5. The Brussels Regulation introduces an entirely new section, SECTION 5, ARTICLES 18-21, which deals with the jurisdiction over individual contracts of employment. It details the respective rules for employers and for employees. Special emphasis is paid to the validity of agreements on jurisdiction, according to ARTICLE 21 such an agreement will only be valid if "entered into after the dispute has arisen" or if it is for the employee's benefit by allowing him to sue in courts other than those identified by this section. It appears as though the Regulation is striving to protect the weaker party in the contractual relationship. Employment contracts like consumer contracts are to be construed in favour of the weaker party; the employee or the consumer.


ARTICLE 19 makes it clear that an employer, domiciled in a Member State, may be sued either (a) in the courts of his domicile or in the courts of the Member State where the employee habitually carries out his work or the last State in which he did so or, if he does not habitually work in any one country, the courts of the place where the business which engaged him is or was situated 6 . It is interesting to note however that the employee can only be sued in the courts of his domicile- ARTICLE 20(1). This seems to change the position under the Convention, the corresponding provision in the Convention, ARTICLE 5(1) provided that, " A person domiciled in a Contracting State may, in another Contracting State, be sued….in matters relating to individual contracts of employment, this place is that where the employee habitually carries out his work…." this wording suggests that either the employer or employee may sue in the State where the employee habitually works. The distinction drawn in the Regulation is very clear with respect to where an employee may be sued and does not permit the flexibility which the Convention seems to allow. This clarification is welcome since it will encourage uniformity and certainty in the application of these provisions throughout the European Community.
6. An amendment to the position under the Convention which may appear minor is with respect to exclusive jurisdiction agreements. The Regulation, in ARTICLE 23 inserts as the penultimate line in the opening paragraph the sentence "Such jurisdiction shall be exclusive unless the parties have agreed otherwise", what this permits is the possibility of a jurisdiction agreement having an either/or option in terms of which country's courts are to have jurisdiction.
However there is one criticism which may be levied against giving parties such freedom and flexibility and that is the fact that such an approach will encourage forum shopping within the Community, a practice which ought to be discouraged. ARTICLE 23(2) demonstrates consistency in the approach of the Regulation to deal with contracts concluded via the internet and allows "any communication by electronic means which provides a durable record of the agreement shall be the equivalent of 'writing'". This recognises the possibility of not only contracts concluded by hitting the "Submit" or "I accept" options but also digital signatures and negotiations via email.
7. Perhaps one of the more practical changes made by the Regulation is the insertion of ARTICLE 30 which for the first time provides a definition of when a court is "first seised". This was a matter for national law under the Convention and it is in the spirit of the Regulation to limit the occasions on which recourse is to be had to national laws. This objective is best achieved by providing workable definitions that can be uniformly applied across the Community. Perhaps the introduction of this Euro-definition was thought necessary because of the criticism of decision of the Court of Justice in Zelger v. Sainitri 7 where it was held that the issue as to when any national court is first seised of proceedings before it is to be determined by the national laws of the particular Member State. The new provision sets out a two limb rule to establish a Euro-definition of when a court is first seised. The first limb deals with States whose initiation of proceedings system is similar to that of England such as the filing of the claim form or other such document and provides that this is the time of seisure, subject to the Plaintiff taking the procedural steps necessary to serve the Defendant with such document(s). This proviso is necessary to safeguard a Defendant from abuse by an unscrupulous Plaintiff who uses the process to frustrate the Defendant by preventing him from initiating proper proceedings in another Member State.
This aspect of ARTICLE 30 is more like an issue of proceedings rule rather than a time of service rule which is the established rule in the England8, the impact on the English position would be quite great. Prior to ARTICLE 30 this issue was procedural and outside the scope of the Convention and therefore it would have been left to an English court to apply its national law and rules of procedure. Now, a Euro-definition has been given and the English courts have to be guided by the Regulation. The second limb is designed to deal with those States where there is an authority which serves documents before they can be lodged with the court. The effect of this is to treat the two systems equally within the Regulation. Unlike the first limb, service on the Defendant is not necessary, this is primarily because responsibility for service is with the authority not the Plaintiff. The Plaintiff however must do that which is necessary to have the document lodged with the court. The purpose of this proviso is once again to protect a Defendant from an unscrupulous Plaintiff.
The inclusion of ARTICLE 30 goes some way in fulfilling the objectives of the Regulation. The purpose of the Regulation as stated by the Commission is to promote certainty and uniformity of understanding and application of the rules and thus it would be imperative to have Euro-definitions and concepts that are autonomous.

8. The provisions dealing with recognition have also been amended by the Regulation in ARTICLE 34 (ARTICLE 27 of the Convention), which deals with the reasons for non-recognition. A judgment will now not be recognised if it is "manifestly" contrary to public policy of the State where recognition is sought (Art. 34(1)). The insertion of this word seems merely to add emphasis rather than clarity.
In the case of a default judgment additional words have been added so that the judgment will be recognised if the Defendant fails to commence proceedings to challenge the judgment when it was possible for him to do so. This amendment puts the onus on the Defendant to act in his own best interests and to act prudently in a timely manner, there are elements of natural justice in this subsection (Art. 34 (2)). The issue with respect to irreconcilable judgments from a third state has been extended to cover the situation where the earlier judgment was given in another Member State (Art. 34(4)). This addresses an issue which was left open by the Convention since the Convention was silent on what the position should be where the two judgments handed down were from two Member States and were irreconcilable. No guidance was to be found in the Convention as to whether the first judgment handed down should be recognised or whether the first judgment for which recognition was sought should be recognised. The Regulation clarifies this situation by explicitly stating that a judgment handed down by one Member State may be refused recognition if irreconcilable with an earlier judgment from another Member State providing always that the earlier judgment qualified for recognition. Therefore the first judgment will prevail if it qualified for recognition.

9. The amendments made to the provisions on enforcement in Chapter III Section 2 are designed primarily to make the process for enforcement of foreign judgments more efficient. ARTICLE 41 of the Regulation provides that a judgment shall be declared enforceable immediately on completion of formalities. No defences to recognition (ARTICLES 34 and 35) can be raised by a Defendant to the enforcement proceedings at this stage. Only an appeal under ARTICLE 43(1) is allowed.
The practical effect of this is that the first part of the enforcement process is automatic and courts can no longer, at this stage, examine and criticize the judgment for which enforcement is sought to determine whether or not it ought to be recognised. Such practices by courts are time consuming and inevitably delays the enforcement of the judgment and are undoubtedly undesirable. The Regulation, by introducing an automatic procedure for enforcement, streamlines the process and ensures that the legitimate expectations of parties are satisfactorily met. This in turn will promote confidence and uniformity in the system.
10. ARTICLE 71(1) of the Regulation explicitly states that this Regulation "shall not affect any conventions to which the Member States are parties and which in relation to particular matters, govern jurisdiction or the recognition or enforcement of judgments". This deals with existing conventions and fails to provide as ARTICLE 57(1) of the Convention did that Member States may become parties to other conventions after the Regulation enters into force. This effectively removes from Member States the ability to negotiate and enter into international agreements on matters falling within the scope of the Regulation and hands it over in its entirety to the institutions of the European Community.

This could only be seen as a deliberate move by the Commission to hold the reigns close to its chest with respect to the areas covered by the Regulation so as to maintain certainty and uniformity across the Community. The whole function and purpose of the Regulation would be defeated if Member States were able to enter into treaty obligations that were diametrically opposed to those of the Regulation.
11. The conditions under which a reference to the Court of Justice for preliminary rulings have changed under the Regulation. Under the 1971 Protocol of the Convention the House of Lords and other courts "when they are sitting in an appellate capacity" had the power to request the Court of Justice to give preliminary rulings on the interpretation of the Convention (Art. 2). The House of Lords had an obligation to refer such questions (subject to acte clair) whereas courts sitting in an appellate capacity had a discretion to refer (Art. 3). However, Article 68 of the EC Treaty now limits this entitlement. The practical consequence of this is that under the Regulation there is an obligation to refer (subject to acte clair) which applies only to courts "against whose decisions there is no judicial remedy under national law".
"Acte clair" has been defined as a situation when the correct interpretation is "so obvious as to leave no scope for any reasonable doubt9 " . A court "against whose decisions there is no judicial remedy under national law" has been defined as the highest court or tribunal in the particular case rather than the highest court or tribunal in the country 10 .

However there may be situations where it is possible for the same court to fall within or outside this definition, the Court of Appeal, hearing an appeal, is not a court against whose decision there is no judicial remedy under national law because it remains possible to petition the House of Lords for leave to appeal 11 . However, the Court of Appeal determining an application for permission to appeal from a lower court is a court against whose decision there is no judicial remedy under national law and under Art. 68 of the EC Treaty it has both the power and the obligation to refer (subject to acte clair). If this is the case then there is an anomalous situation in that on the one hand it arguably could send a reference to the Court of Justice immediately 12 or on the other hand, if it grants permission to appeal it loses the power to refer questions to the Court of Justice on hearing the appeal. Therefore the changes that this makes are as follows:
(i) the Court of Appeal, when hearing an appeal, no longer has the power to refer questions on the interpretation of the Regulation to the Court of Justice for a preliminary ruling. In the vast majority of cases only the House of Lords will have that power.
(ii) When applying to the Court of Appeal for permission to appeal a decision from a lower court, it will be possible to argue that the Court of Appeal has (subject to acte clair) the power and the obligation to refer questions on the interpretation of the Regulation to the Court of Justice failing which it must grant permission to appeal.
The practical effect of this for the Court of Justice will be a decrease in the number of courts from which references will be made, this does not necessarily translate into fewer references.
This may be seen as an attempt to make legal proceedings more effective and less time consuming since parties to litigation may not want to wait around for a determination from the Court of Justice while they are being denied their money and/or goods.
12. One important area which has been totally ignored by the Regulation is the issue of the proper parameters within which Member States may stay proceedings on the grounds of forum non conveniens in favour of either another Member State or a non Member State. The Regulation deals with the issue of "a court first seised" without dealing with the grounds for staying the proceedings. The really problematic area is whether an English court has a discretion to stay proceedings where it has jurisdiction by virtue of the Convention/Regulation but where the court of a non Member State or another Member State is a more appropriate forum. The Court of Appeal in Re Harrods (Buenos Aires) Ltd13 held that although the court had jurisdiction under Art. 2 of the Convention, the proceedings could be stayed if the Defendant was able to satisfy the court that a non-Contracting State was the more appropriate forum. The Court of Appeal was of the opinion that there would be no negative ramifications on the intent and purport of the Convention if the English court declined jurisdiction since any judgment in the matter would be outside of the European Community and would not create a precedent for other Contracting States. However what the Court of Appeal did in fact do was set a precedent for staying proceedings in favour of a non-Contracting State, the application of this precedent to situations where the more appropriate forum is another Member State is unclear and uncertain.

The Brussels Convention contains no provisions in Title II which deals with jurisdiction on the relationship between the courts of Contracting States and non-Contracting States and how it should be regulated. The Brussels Regulation should have been the ideal means to address this situation and end the controversy that this Court of Appeal decision and the absence of clear statements on the regulation of relationships between the courts of Member States and non-Member States has created. This is one of the greatest failings of the Brussels Convention and it lives on in the Brussels Regulation.

CONCLUSION
While the foundations, such as the bases of jurisdiction and the principles for the recognition of foreign judgments, of the Brussels Convention remain unaltered by the Brussels Regulation what the Regulation does is to bring clarity to issues which were unclear and which made the application of the relevant provisions unpredictable and difficult. Whether or not the changes made by the Regulation will have the desired effect of promoting certainty, uniformity, transparency in the law without each Member State having to delve into its own national laws too often remains to be seen. But the development of Euro-definitions and measures which encourage efficiency can only be regarded as steps in the right direction. In spite of failing to put right all that was wrong with the Brussels Convention perhaps the saving grace is the fact that the Brussels Regulation is a regulation and therefore future amendments will be easier, quicker to make and implemented with greater ease throughout Member States.

  1. Official Journal L12 of 16.01.2001[^ Return]
  2. In the UK s.41 of The Civil Jurisdiction and Judgments Act 1982 is the relevant provision[^ Return].
  3. See Harris, 'The Brussels Regulation' (2001) 20 Civil Justice Quarterly 218[^ Return]
  4. Issued at the Justice, Home Affairs and Civil Protection Council meeting of 30 November and 1 December 2000 when they reached political agreement on the Brussels Regulation.[^ Return]
  5. See Harris, 'The Brussels Regulation' (2001) 20 Civil Justice Quarterly 218 at 221[^ Return]
  6. See Case C-385/96 Rutten v. Cross Medical [1997] ECR I-57 where the Court of Justice held that where an employee works in several Contracting States, the place where he habitually carries out his work is the place where he has established the effective centre of his working activities.[^ Return]
  7. Case 129/83 [1984] ECR 2397[^ Return]
  8. Dresser UK Ltd v. Falcongate Freight Management Ltd [1992] QB 502, [1992] 2 All ER 450[^ Return]
  9. Case 283/81 Cilfit v. Ministry of Health [1983] ECR 3415[^ Return]
  10. Case 6/64 Costa v. ENEL [1964] ECR 585[^ Return]
  11. Chiron Corpn v. Murex Diagnostics [1995] All ER (EC) 88; R v. The Pharmaceutical Society of Great Britain ex p The Association of Pharmaceutical Importers [1987] 3 CMLR 951[^ Return]
  12. Case 133/83 R v. Thomas Scott & Sons Bakers Ltd [1984] ECR 2863[^ Return]
  13. [1992] Ch 72, [1991] 4 All ER 334[^ Return]


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