The Regulation The Regulation (the Brussels I bis Regulation) deals with two key crossborder litigation issues, namely: (1)the international jurisdiction of the courts (2)the enforcement of foreign court judgments (beyond the scope of this module) To decide if the English courts have jurisdiction under the Regulation, we must apply a three step test. Does the Regulation apply? o There must be an international element to the claim. The international nature of the legal issue need not be significant. It might derive from the subject matter or domicile of a party rather than the involvement of a number of Member States. o The claim must fall within the material scope of the Regulation. There must be a sufficient connection between the claim and a Regulation Member State. INDIVIDUALS: There will be a connection if the defendant is domiciled in a Regulation Member State. This is to be decided on the ‘internal law’ of that state. The Civil Jurisdiction and Judgments Order 2001 governs the position in the UK (must be resident in the UK and the nature/circumstances of residence indicate a substantial connection). An individual is generally perceived as being ‘resident’ in the UK if it is a ‘settled or usual place of abode’ which connotes ‘some degree of permanence or continuity’. A substantial connection is presumed to exist where the individual has been resident in the UK for the last 3 months or more. Where domicile is disputed before the English courts, the burden of proof is on the claimant to show a good arguable case that the defendant was domiciled/resident at the time the claim form was served. COMPANIES: The domicile of a company is defined in Article 63. It is where the company has it’s a) statutory seat; or b) central administration; or c) principal place of business. These are not all concepts which are found in English company law. The Regulation goes on to state that ‘statutory seat’ means the registered office or, where there is no such office anywhere, the place of incorporation/the place under the law of which the formation took place.
PARTNERSHIPS: Article 63 refers to the domicile of an ‘association of natural or legal persons’. The domicile of such a body is stated as being the place where it has its statutory seat, or central administration, or principal place of business. EXCLUSIVE JURISDICTION (Article 24): Recital 16 confirms that in addition to the defendant’s domicile, there will also be a connection between the claim and the Regulation Member States if the ‘exclusive jurisdiction’ rules apply. This rule is designed to ensure that certain types of cases, especially those tied to a particular jurisdiction, are heard in that jurisdiction for practical reasons. This provision will apply ‘regardless of the domicile of the parties’. On this basis, the use of the Regulation may be triggered even though the defendant is not domiciled within a Regulation Member State. There may be a choice of jurisdiction (Article 25) if there is a choice of jurisdiction clause in the contract. For Article 25 to apply, the parties must have agreed that the courts of a Regulation Member State have jurisdiction to settle any disputes arising in connection with their relationship. For the purposes of Article 25, it does not matter where the parties are domiciled. It only applies to certain types of claim. Article 1 provides that the Regulation applies in civil and commercial matters whatever the nature of the court or tribunal. Certain types of claim are expressly excluded e.g. bankruptcy proceedings or claims relating to wills and succession. What matters is the substance and not the form of the particular claim. Where a single claim raises a number of different issues, the question for the court is whether the ‘principal subject-matter’ of the claim falls within one of the exceptions. ‘Civil and commercial matters’ should be interpreted broadly. In contrast, the exclusions to the Regulation should not be interpreted broadly. When deciding upon the scope of these exclusions, the court must look to ‘connected’ pieces of EU legislation in order to reach an ‘autonomous interpretation’ of EU law and, consequently, a uniform application. o The claim must fall within the temporal scope of the Regulation.
The Regulation only applies as from a certain date. The temporal scope is set out in Articles 66 and 81. In summary, the Regulation’s rules on foreign jurisdiction apply to legal proceedings instituted on or after 10 January 2015. In claims commenced before this date, the jurisdiction of the English courts will be decided in accordance with one of the other jurisdiction regimes applicable before the English courts. The Common Law Rules, in particular, apply as an ultimate ‘fall back’ if none of these other regimes apply. Do the courts of England and Wales have jurisdiction under the Regulation to determine the claim? o There are several provisions in the Regulation which might apply to determine that the courts of a particular country, or countries, have jurisdiction to deal with the claim. Some of these take priority over others. The order of priority of these rules is an important factor in their application. o Exclusive jurisdiction rules (Article 24) – These take priority over all the other rules giving a court jurisdiction. On this basis, only the court(s) designated by Article 24 will have jurisdiction to hear the claim. If the claimant commences proceedings in respect of these claims before the courts of any other Regulation Member State, such other courts must decline jurisdiction. This is not dependent on the defendant raising the issue and must be done ‘of its own motion’ Article 24 allocates exclusive jurisdiction over 5 specific categories of case: Land – proceedings that have as their object rights in rem in immovable property or tenancies of immovable property situated in a Member State. Validity of a company Validity of entries in public registers Patents, trade marks and designs Enforcement of judgments o The submission rules (Article 26) Article 26 provides that the courts of a Regulation Member State have jurisdiction where a defendant ‘enters an appearance’ unless that appearance is entered to contest jurisdiction. The reference to ‘entering an appearance’ is to taking a step in the court process. For the purposes of English court proceedings, this will usually occur when the defendant acknowledges service of the claim form/particulars of claim or files a defence. Submission can be implicit and so a defendant
should be very careful in the way in which it corresponds with a claimant. If the defendant to the claim is considered to be a ‘weaker party’ (e.g. a consumer or an employee), the Regulation rules on submission will not apply until the ‘weaker party’ defendant has been informed of its right to contest jurisdiction and the consequences that will arise if it enters (or does not enter) an appearance in the proceedings (Article 26(2)). There is s special box on an English acknowledgement of service which a defendant must ‘tick’ if it is contesting the jurisdiction of the English courts. Failure to follow this procedure might result in the defendant impliedly submitting to the jurisdiction (CPR 10.1(3)(b) and CPR 11). If a defendant domiciled in a Regulation Member State is sued before the courts of another Regulation Member State which does not have jurisdiction under the Regulation, the defendant may either: plead to that the court has no jurisdiction under the Regulation; or submit to the jurisdiction by ‘entering an appearance’. o The choice of jurisdiction rule (Article 25) The parties may agree that a particular court will have jurisdiction to hear their dispute. Freedom of contract – and the freedom to choose jurisdiction – is one of the cornerstones of the Regulation; see recital 19. However, a jurisdiction clause cannot override the exclusive jurisdiction rules (under Article 24) and a jurisdiction clause cannot override submission by a party to the jurisdiction (under Article 26). CONTRAVENTION: Article 31(2) sets out rules to deal with the situation where a party commences proceedings in another Regulation Member State in contravention of a binding jurisdiction clause. The courts must stay their proceedings as soon as the courts of the correct Regulation Member State have been seised (i.e. become involved by the defendant making an application to it), pending a decision as to whether it does have valid jurisdiction. The rationale for the rule is explained in Recital 22. Pursuant to Article 31(4), care should be taken when dealing with consumer and employment cases to ensure that (a) any choice of jurisdiction agreement is binding and (b) the correct court has accordingly been ‘seised’ of the dispute. o General rule (Article 4) – provides that persons domiciled in a Regulation Member State, whatever their actual nationality,
must be sued in the courts of that particular. ‘Domicile’ is the cornerstone of jurisdiction under the Regulation – see recital 15. So if Articles 24, 25 and 26 do not apply, you will generally ‘fall back’ on this general rule. o The ‘special’ jurisdiction rules (Articles 7 & 8) – these provide alternatives to the general rule. They often provide a choice to a claimant as to where it can commence proceedings, if the exclusive jurisdiction, submission and choice rules set out above do not apply. The rules cannot be used against defendants who are not domiciled in the EU. Contract (Article 7(1)) – In matters relating to a contract, a person domiciled in a Member State may be sued in the courts for the place of performance of the obligation in question. For the sale of goods, the place of performance of the obligation in question is the place where the goods were delivered (or should have been delivered). For the provision of services, it is where the services were provided (or should have been provided). Tort (Article 7(2)) – In matters relating to tort, a person domiciled in a Member State may be sued in the courts for the place where the harmful event occurred or ma occur. The concept of ‘where the harmful event occurred’ has been expanded by case law. The ‘harmful event’ can be considered to occur in the country where the tort was committed or in the country where the damage was sustained. Branch/Agency (Article 7(5) – Can sue in the courts for the place in which the branch, agency or other establishment is situated if a dispute arises out of the operations of that branch/agency or other establishment. Co-defendants (Article 8(1)) – A person can be sued in the courts where a co-defendant is domiciled, provided that the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings. Third parties (Article 8(2)) – A person can be sued as a third party in an action on a warranty or guarantee, or in any other third party proceedings, in the court in which the original claim mis pending. Counterclaim (Article 8(3)) – A counterclaim arising from the same contract or facts as those on which the original claim was based may be brought in the court in which the original claim is pending.
o The weaker party exceptions – As a general rule, the weaker parties can only be sued in the Regulation Member State in which they are domiciled. The stronger parties can also be sued in the Regulation Member State in which the weaker party is domiciled (or in the case of an employment contract, where the employee carries out its work). Insurance matters (beyond the scope of this course) Consumer contracts – Articles 17-19 Contracts of employment – Articles 20-23 If so, can the courts of England and Wales actually accept jurisdiction? o Lis pendens (Article 29) Where proceedings involving the same cause of action between the same parties are brought in the courts of different Regulation Member States, any court other than the court ‘first seised’ must, of its own motion, stay its proceedings until such time as the jurisdiction of the court first seised is established. This article is designed to prevent parallel proceedings before the courts of different Member States. o Related actions: Article 30 Where ‘related’ actions are pending in the courts of different Regulation Member states, any court other than the court first seised may stay its proceedings i.e. it has a discretion. As to what constitutes a ‘related’ claim depends on the individual circumstances of the case and the discretion of the court which has been second seised. Article 30(3) does, however, state that actions are ‘related’ where they are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings. Where the first action is pending at first instance, any court other than the court first seised may also decline jurisdiction if the court first seised has jurisdiction over both of the actions in question and its law permits the consolidation of these actions. o The court first seised: Article 32 A court is deemed seised when: The document instituting the proceedings is received by the court, or If it requires service before lodging with the court, when it is received by the agent responsible for service. PROVIDED THAT the claimant then gets on with any steps that it is required to undertake to effect such service/lodging.
In relation to parties in Regulation Member States, the English court will generally be deemed seised on the issue of the claim form, although it is necessary to then press on with service.
The Common Law Rules If the Regulation (or any other non-examinable jurisdiction regime) does not apply to your client’s particular case, the court will apply the Common Law Rules to decide whether or not it will have jurisdiction to hear the dispute. Under the Common Law Rules, the courts of England and Wales will have jurisdiction over a foreign defendant in the following circumstances: Presence – where the proceedings are served on the foreign defendant within the jurisdiction. o Most commercial claims are categorised as being ‘in personam’ – a claim brought against a person (whether natural or legal), requiring that person to do or refrain from doing a particular act. A central principle applying before the courts of England and Wales is that those courts will, on the whole, have jurisdiction over such natural or legal persons if the English court proceedings can be validly served upon them. o Under the Common Law Rules, a foreign defendant will in principle be subject to the jurisdiction of the courts of England and Wales if the proceedings are served on the defendant whilst they are within the jurisdiction. Being within the jurisdiction may be permanent or it could be temporary, as was established in the 1972 case of Maharanee of Baroda v Wildenstein. Proceedings can be issued in England and Wales and served on a ‘common law’ defendant within the jurisdiction, irrespective of (i) whether the defendant is only within the jurisdiction temporarily; and (ii) the degree of connection with England and Wales of the defendant or the cause of action. o The position with regard to the presence of companies and partnerships becomes particularly complex. In Dunlop v Actien-Gesellschaft, the defendant (a company incorporated abroad) was held to be present in the jurisdiction as a result of its presence at a trade fair in Crystal Palace. Even though the company appeared at the fair for only nine days, it was still deemed to have been carrying on business in the jurisdiction and capable of being served personally. Bear in mind that a defendant might be cautious of accepting service of a claim form and might even seek to avoid such service. An interesting example of this is
demonstrated in Alexandre Yakovlevich Tseitline v Leonid Victorovich and others. o Forum conveniens – If the defendant thinks it has been sued in the wrong jurisdiction, they can seek to stay the proceedings on the grounds that England and Wales is not the natural forum. The burden of proof is on the party seeking the stay i.e. the defendant. It is up to the defendant to show that there is another court which is available to the claimant and which is clearly or distinctly more appropriate for the trial of the action. Submission – where the defendant submits to the jurisdiction of the courts of England and Wales. There are two main ways in which a defendant can submit to the jurisdiction of the court. o Appointing an agent for service of process – A foreign defendant may be happy for the courts of England and Wales to have jurisdiction. As a result, it may appoint a solicitor in England and Wales to accept service on its behalf, and the proceedings can then be served on that solicitor within the jurisdiction. By doing this, the defendant is submitting to jurisdiction. o Appearing in the proceedings Proceedings may be served on a foreign defendant outside the jurisdiction, in breach of the Common Law Rules. Nevertheless, a foreign defendant may appear in the proceedings because it is happy for the case to proceed in England and Wales, or because it does not realise that the rules have been breached. If the foreign defendant does appear in proceedings (by taking a step in the proceedings, for example, by serving a defence), it will have submitted to the jurisdiction. If a defendant does not wish to submit to jurisdiction, it should not do anything more than (1) acknowledge service within the appropriate time limit, indicating an intention to dispute jurisdiction on the acknowledgement of service and (2) apply under CPR 11 for a declaration that the English court lacks jurisdiction to hear the dispute. Appearing in the proceedings simply to contest jurisdiction does not of itself constitute submission – Williams & Glyn’s Bank v AstroDinamico. Permission – The courts of England and Wales may give the claimant permission to serve the proceedings on the foreign defendant out of the jurisdiction (CPR 6.36). Any such application for permission is like any other interim application. On this basis, an application to serve a claim form abroad is made pursuant to CPR 23. There is a three step test to meet; if the requirements are established then the courts may grant the applicant permission – it is discretionary.
o Step 1 – Establishing a ‘jurisdictional gateway’ Necessary or proper party (6BPD 3.1(3) & (4)) – 6BPD 3.1(3) is used where a claim is made against someone on whom the claim form has already been/will be served and (a) there is, between the claimant and that defendant, a real issue which it is reasonable for the court to try; AND (b) the claimant now wishes to also serve the claim form on another person who is also a necessary or proper party to that original claim against the defendant. 6BPD 3.1(4) is then used where a claim is a Part 20 claim (i.e. an ‘additional claim’) and where the person to be served with the claim form is a necessary or property party to that claim. Contract (6BPD 3.1(6) & (7)) – (1) A claim is made in respect of a contract, where (a) the contract was made within the jurisdiction; (b) the contract was made by or through an agent trading or residing within the jurisdiction; (c) the contract is governed by English law; or (d) the contract contains a term conferring jurisdiction on the courts of England and Wales OR (2) a claim is made in respect of a breach of contract committed within the jurisdiction. Tort (6BPD 3.1(9)) – A claim is made in respect of tort where: (a) the damage was sustained within the jurisdiction; or (b) the damage sustained resulted from an act committed within the jurisdiction. o Step 2 – Reasonable prospect of success Pursuant to CPR 6.37(1)(b), the applicant must demonstrate a ‘reasonable prospect of success’ in the cause of action in respect of which he seeks permission. This is a relatively low threshold and has been equated to the prospect of success needed to resist an application for summary judgment – De Molestina v Ponton. o Step 3 – England and Wales is the proper place in which to bring the claim Step one (forum conveniens): The court may consider many factors in deciding whether England is the natural forum. Residence or place of business of the defendant Applicable law Availability of witnesses Local knowledge Cost/delay/inconvenience of proceeding elsewhere Step two: If England is not the natural forum, the court will go on to apply the second test – does substantial justice require the case to be tried in England anyway?
Is legal aid available in one jurisdiction but not in the other? Are there risks of assassination, trumped up charges, lack of a fair trial or the risk of improper government interference in a different jurisdiction? See Deripaska v Cherney. Spiliada Maritime v Cansulex is the leading case on natural forum.
Effect on proceedings Permission to serve – Depending on which jurisdiction rules apply, a claimant may or may not need permission from the court to serve proceedings on a defendant outside the jurisdiction. o No permission (CPR 6.33) – If the regulation applies and the English courts have jurisdiction to determine the claim, the claimant will not need permission to serve the proceedings on the defendant outside the jurisdiction. o Permission (CPR 6.36 & 6.37) – Under the Common Law Rules, if the defendant is physically located outside the jurisdiction at the time that it is sought to serve the proceedings, permission will be needed. o If a claimant is seeking to serve an English claim form abroad without permission (i.e. under the Regulation), it must file Form N510 when it issues and files its claim form (CPR 6.34). This essentially confirms to the court the basis upon which it has jurisdiction over a foreign-domiciled defendant in circumstances where the court’s permission has not been sought. Extended periods for filing an acknowledgement of service/defence apply to countries governed both by the Regulation and the Common Law Rules. o For Regulation Member States, the defendant has 21 days after service of the particulars of claim to acknowledge service or file a defence. If the defendant acknowledges service, it has 35 days after service of the particulars of claim to file a defence (see CPR 6.35(3)). o For Common Law countries, the periods are generally longer. In essence, the more inaccessible the country is (in terms of distance from the UK), the longer the period will be. The defendant has the number of days referred to in the table in 6BPD to either acknowledge service or file a defence. If the defendant acknowledges service, the total period of time within which it must then serve its defence is the number of days listed in the table plus an additional 14 days. Validity of process – Where a claim form has validly been issued under either the Regulation or the Common Law Rules, the period for service is six months where the claim form is to be served outside the jurisdiction (CPR 7.5(2)). This can be contrasted with the
situation where a claim form is to be served within the jurisdiction; it is then normally valid for only four months. Service abroad Means of service – There are a number of options set out in CPR 6.40, including the option to serve a claim form by any method permitted by the law of the country in which it is to be served. o Note: Nothing in CPR 6.40 or in any court order shall authorise or require any person to do anything in the country where the claim form is to be served which is against the law of that country. In practice, therefore, you are likely to need to consult lawyers in the country where you wish to effect service. If you do not serve correctly, you might subsequently be unable to enforce any judgment that you obtain. Deemed date of service when serving an English claim form abroad o The deemed date of service rules (as contained in CPR 6.14 & 6.26) apply only to claim forms and other documents being served within the jurisdiction and, since April 2011, within the whole of the UK. o Regulation (EC) No 1393/2007 on the service in the Member States of judicial and extrajudicial documents in civil or commercial matters (the ‘EU Service Regulation’) – The document will be deemed to be served on the date on which the document is served in accordance with the law of the relevant Member State. o Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters signed in The Hague on 15 November 1965 (the ‘Hague Service Convention’) – Pursuant to the Hague Service Convention, documents are generally served via diplomatic or judicial channels. In these circumstances, a certificate will be issued. This will specify the date of service, based on the particular method of service which has been used.
