The Council on the review of the Brussels I Regulation – Confusing proposals on the ‘protected categories’

The Council in June issued its ‘General Approach‘ on the review of the Brussels I Regulation /the Jurisdiction Regulation. The General Approach is the backbone of what will be the Council Common Position, once the European Parliament has held its ‘first reading’ (which is now scheduled for November 2012, after having been postponed twice: from January 2012 it had already been moved to June). I commented here on the arbitration exception.

The Council’s view on the extension of the ‘protected categories’ is relevant for the general issue of the ‘extraterritorial’ working of the Regulation. The protected categories are contracts where the EU gives specific protection to consumers, employees, and insureds, allowing the ‘weaker’ party additional fora to sue, and limiting forum choice for the stronger party.

The Commission proposal generally makes the protective jurisdiction rules available for consumers, employees and insured also applicable if the defendant is domiciled outside the EU.

The Council, by contrast, reinstates the domicile condition for the protective jurisdictional rules with respect to insurance, however then inserts a slightly confusing section for consumer contracts, and a rather mixed regime for employment contracts.

With respect to consumer contracts, the Council re-inserted the reference to Article 4 of the Regulation (albeit in a renumbered 4a fashion). Article 4 suggests that against defendants not domiciled in the EU, the EU Regulation (with one or two exceptions, which are not of interest here) does not apply, and national conflict rules take over. However the Council then oddly inserts in Article 16(1):

 ‘A consumer may bring proceedings against the other party to a contract either in the courts of the Member State in which that party is domiciled or, regardless of the domicile of the other party, in the courts for the place where the consumer is domiciled.’

(the extract in bold is the Council’s addition to the Commission proposal)

One assumes that this insertion in Article 16(1) does not trump the Council’s re-insertion of Article 4 (now as noted, 4(a)), hence the counterparty would still have to be domiciled in the EU, for the consumer contracts section to apply.

As far as employment contracts are concerned, here, too, the Council refers to Article 4 (4a), in Article 18(1), however then adds in Article 19(2), that an employer not domiciled in a Member State may be sued in a court of a Member State, either in the courts for the place where or from where the employee habitually carries out his work or in the courts for the last place where he did so, or if the employee does not or did not habitually carry out his work in any one country, in the courts for the place where the business which engaged the employee is or was situated.

This raises a contradiction with respect to employers located outside the EU. Either one follows the Article 4a cue and decides they are out of reach of the JR, or one assumes the new Article 19(2) takes priority.

The latter interpretation would mean that only for employment contracts, the Council follows the Commission’s view and brings non-EU based employers within the reach of the JR. Might that be because in carrying out the contract in the EU, these issues have a stronger territorial EU link?


note: I have in a later entry clarified that proposed recital 11f confirms that in fact the consumer title is meant to apply to companies not domiciled in the EU.

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