Posts Tagged Council
here); and the circulation of arbitral awards and arbitration-related judgments, including the issue of the conclusive and preclusive effects of prior arbitral awards in relation to conflicting judgments (res judicata issues: including whether the priority which the Brussels I-Regulation concedes to the New York Convention, means that a court in a Member State can or indeed must give priority to a conflicting arbitral award over a judgment of the court of another EU Member State).the existence of parallel arbitration and judicial proceedings (lis pendens issues; see also
A great kick-off to a continuing debate. Geert.
Other than for those of the low countries (who will appreciate that this is a Sinterklaas gift and hence impeccably timed), Father Christmas has brought an early gift on 6 December: Council adopted the recast of the Brussels I Regulation. Council having accepted all of the EP’s amendments (with the Commission not having made any changes since the adoption by Parliament), the text which I reported on earlier, will now be applicable as of early 2015.
I have been taught never to look a gifted horse into its mouth, of course, however as I have flagged on this blog, the recast is not satisfactory in all its parts. Difficulties in practice will remain and future interpretation /adaptation likely. However repetition, too, accords with the festive season.
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 and here on the protected categories.
In its General Approach on the review of the Brussels I Regulation, the Council of the EU proposes the following with respect to choice of court agreements:
If the parties, regardless of domicile, have agreed that a court or the courts of a Member State are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that court or those courts shall have jurisdiction, unless the agreement is null and void as to its substantive validity under the law of that Member State.
The Commission had proposed ‘substance’ rather than the words ‘substantive validity’. The Council also suggest inserting a recital as follows:
The question as to whether a choice of court agreement in favour of a court or the courts of a Member State is null and void as to its substantive validity should be decided in accordance with the law of that Member State. The reference to the law of the Member State of the chosen court should include the conflict of laws rules of that State.
Finally, the Council prooses to add a fifht para to Article 23 as follows:
‘5. An agreement conferring jurisdiction which forms part of a contract shall be treated as an agreement independent of the other terms of the contract.
The validity of the agreement conferring jurisdiction cannot be contested solely on the ground that the contract is not valid.’’
Both the Council and the Commission proposal address the elephant in the room: Article 23 of the Jurisdiction Regulation lists a number of requirements establishing consent to choice of court agreements, however it does not address any conditions for the validity of the underlying agreement. The majority of ECJ authority would seem to favour having the validity of the forum clause to be exclusively determined by the conditions of Article 23. I would however submit that the material validity of the forum clause under the curent version of the JR ought to be determined by the lex contractus.
The result of the discussion is unsatisfactory, as in practice it leaves it up to the Member States to decide how to address the substantive validity of choice of court agreements. This is now addressed by the Commission in its proposal for review of the JR: the proposal introduces a harmonised conflict of law rule on the substantive validity of choice of court agreements, thus ensuring a similar outcome on this matter whatever the court seized. The Council amendment aims at making the solution clearer still.
Oddly, the Council adds renvoi to the mix (see ‘The reference to the law of the Member State of the chosen court should include the conflict of laws rules of that State.’). EU private international law, for good (mostly practical) reasons typically excludes renvoi. I am not entirely sure that adding it here has any merit.
Note that in line with the Hague Convention on Choice of Court Agreements, it will no longer be necessary for at least one of the parties to be domiciled in the EU, for an agreement giving jurisdiction to a court in the EU to be covered by the JR.
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.
The Council in June issued its ‘General Approach‘ on the review of the Brussels I Regulation /the Jurisdiction Regulation – just in time as it happened for June exams . 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 will be posting one or two comments on the General Approach on this blog, starting with the arbitration exception. For background reading please search the blog for ‘West Tankers’.
Pro memoria: The European Parliament’s rapporteur and the EP in full afterwards suggested no movement on the issue at all, other than a clearer proviso on the arbitration exclusion, specifying that
not only arbitration proceedings, but also judicial procedures ruling on the validity or extent of arbitral competence as a principal issue or as an incidental or preliminary question, are excluded from the scope of the Regulation.
Consequently the rapporteur called for a more robust protection of arbitration, by ring-fencing arbitration in a more aggressive way.
In its eventual proposal on the review of the JR, COM(2010) 748, the European Commission proposed the specific inclusion of a jurisdictional ground for arbitration:
This Regulation shall not apply to (…)
Arbitration, save as provided for in Articles 29, paragraph 4, and 33, paragraph 3.
Article 29, paragraph 4, new:
4. Where the agreed or designated seat of an arbitration is in a Member State, the courts of another Member State whose jurisdiction is contested on the basis of an arbitration agreements shall stay proceedings once the courts of the Member State where the seat of the arbitration is located or the arbitral tribunal have been seised of proceedings to determine, as their main object or as an incidental question, the existence, validity or effects of that arbitration agreement.
This paragraph does not prevent the court whose jurisdiction is contested from declining jurisdiction in the situation referred to above if its national law so prescribes.
Where the existence, validity or effects of the arbitration agreements are established, the court seised shall decline jurisdiction.
This paragraph does not apply in disputes concerning matters referred to in Sections 3, 4, and 5 of Chapter II.
For the purpose of this Section, a court shall be deemed to be seised (…)
3. For the purpose of this Section, an arbitral tribunal is deemed to be seised when a party has nominated an arbitrator of when a party has requested the support of an institution, authority or a court for the tribunal’s constitution.
[author’s note: Sections 3, 4 and 5 referred to in the newly proposed Article 29(4), are the sections dealing with the protected parties: insurance contracts; consumers; employment contracts].
The June 2012 ‘General Approach’ document by the Council in my view adopts the worst possible scenario. With respect to arbitration, the Council suggests
– Not to adopt the aforementioned Articles 29, paragraph 4, and 33, paragraph 3 (these suggested amendments would therefore be deleted in their entirety).
– To include the following in Article 84:
2. This Regulation shall not affect the application of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done at New York on 10 June 1985.
– Finally, to include a recital as follows:
- “This Regulation should not apply to arbitration. Nothing in this Regulation should prevent the courts of a Member State, when seised of an action in a matter in respect of which the parties have made an arbitration agreement, from referring the parties to arbitration of from staying or dismissing the proceedings and from examining whether the arbitration agreement is null and void, inoperative or incapable of being performed, in accordance with their national law.
- A ruling given by a court of a Member State as to whether or not an arbitration agreement is null and void, inoperative of incapable of being performed should not be subject to the rules of recognition and enforcement of this Regulation, regardless of whether the court decided on this as a principal issue or as an incidental question. On the other hand, where a court, exercising jurisdiction under this Regulation or under national law, has determined that an arbitration agreement is null and void, inoperative or incapable of being performed, this should not prevent that the court’s judgment on the substance of the matter be recognised and, as the case may be, enforced in accordance with this Regulation. This should be without prejudice to the competence of the courts of the Member States to decide on the recognition and enforcement of arbitral awards in accordance with the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done at New York on 10 June 1958, which takes precedence over this Regulation.
- This Regulation should not apply to any action or ancillary proceedings relating to, in particular, the establishment of the arbitral tribunal, the powers of the arbitrators, the conduct of the arbitration procedure or any other aspects of such a procedure, nor to any action or judgment concerning the annulment, review, appeal, recognition and enforcement of an arbitral award.”
The Council would therefore maintain the principal exclusion for arbitration, and emphasise the priority of the New York Convention. However it also maintains the confusion over the exact scope of the arbitration exclusion. Its curious use of an extended recital basically re-iterates all the points of discussion resulting from the current text and the case-law applying it. Any party wanting to stall, torpedo, or otherwise sabotage proceedings with even a hint of arbitration elements in them, will find itself well served with the proposed recital which ― rather adroitly, it has to be said ― manages to integrate all unsettled points of discussion in a matter-of-factly way which amounts to sheer denial of the problems that arise in practice.
Council reports that it has been in consultation with the Parliament, in the run-up to the General Approach. However one hopes that this recital is not one that the EP would be happy to sign off on.