Brussels I Regulation (recast) in the EU

The Brussels I Regulation (recast) is the secondary EU legislation that provides for the recognition and enforcement of choice of forum clauses and judgments in ‘civil and commercial' matters (Article 1).

In the absence of a prorogatio fori or the ‘designation in an agreement of a specific tribunal to hear a dispute arising under or relating to that agreement’, subject to Article 25 of Brussels I (recast), the general forum is the domicile of the defendant (Article 4). If there is a ‘sufficient link' between the subject matter of a dispute and a concrete EU Member State, under Section 2 (Articles 7-9 of Brussels I (recast)) special jurisdiction rules may apply. However, in several cases, the CJEU has restrictively interpreted derogations from the basic rule that the domicile of the defendant is the place to be sued. This follows a uniform EU interpretation to ensure equal jurisdiction among EU Member States. The situation may vary when there is a clause submitting to a foreign non-EU court since the domestic law of the forum will be applied to determine the validity of such a clause.

In the scope of its application, Brussels I (recast) displaces domestic laws and does not follow conflict of law rules, nor does it address the contractual validity of jurisdiction agreements. As a rule of thumb, national law as designated by a forum’s PIL defines the validity of a dispute resolution clause when the judge analyses their own competence over a dispute and decides whether to proceed, to refer the parties to another court or even prohibit them from commencing proceedings in other forums or arbitral tribunals. The rales of judicial procedure only regulate what relief a claimant may seek when attempting to enforce a jurisdiction clause (i.e., the appropriateness of a transfer, dismissal or stay of the action).

Article 1 (2)(d) and Recital 12 state that the Brussels I Regulation (recast) shall not apply to arbitration. The first two paragraphs of Recital 12 read 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 entered into an arbitration agreement, from referring the parties to arbitration, from staying or dismissing the proceedings, or 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 or incapable of being performed should not be subject to the rules of recognition and enforcement laid down in this Regulation, regardless of whether the court decided on this as a principal issue or as an incidental question.

The third paragraph of Recital 12 states that where the EU Member State court has determined. through the exercise of its jurisdiction under the Regulation or national law, ‘that an arbitration agreement is null and void, inoperative or incapable of being performed’, its judgment on the substantive matter may be recognised and enforced (if necessary) according to the Regulation. Moreover, the Regulation recognises the competence of EU Member State courts ‘to decide on the recognition and enforcement of arbitral awards’ under the New York Convention regime, which takes precedence over Brussels I (recast).^[1] Article 73 of the Regulation expressly states that the Regulation ‘shall not affect the application of the 1958 New York Convention’.

Prorogatio fori and derogatio fori under the Brussels I Regulation (Recast)

A jurisdiction agreement in an international contract generally has two effects: it positively determines the jurisdiction of the chosen court (prorogatio fori) and it departs from the natural jurisdiction (derogatio fori).²* This applies to the Brussels I (recast) system and how dispute resolution clauses included in contracts for the carriage of goods by sea are recognised by the EU Member States.

Article 25 of the Brussels I Regulation (recast) sets out the formal validity of jurisdiction agreements. The jurisdiction of an EU Member State court is exclusive if the parties have not agreed on the contrary. It also presupposes the contractual validity of a jurisdiction clause, which is determined by the applicable law:

• 1. If the parties, regardless of their 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. Such jurisdiction shall be exclusive unless the parties have agreed otherwise. The agreement conferring jurisdiction shall be either:
  • a) in writing or evidenced in writing;
  • b) in a form which accords with practices which the parties have established between themselves; or
  • c) in international trade or commerce, in a form which accords with a usage of which the parties are or ought to have been aware and which in such trade or commerce is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade or commerce concerned.
• 2. Any communication by electronic means which provides a durable record of the agreement shall be equivalent to ‘writing’.
• 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.

The jurisdiction agreement must be in writing, in accordance with practices established between the parties or in line with the prevailing usage in international commerce (i.e., according to the normal practices in international shipping, when analysing contracts for the carriage of goods by sea). However, the material validity is determined according to the substantive law applicable to the contract.^[2]

The substantive validity of choice of forum agreements could be subject to different domestic laws. The consent of the parties is an autonomous criterion, independent of any lex fori in EU Member States. The Rome I Regulation (in Article l(2)(e)) excludes from its scope choice of law rules related to forum selection clauses and arbitration agreements. Article 25(1) of the Brussels I Regulation (recast) provides for a uniform conflict rule regarding the substantive validity of jurisdiction clauses, relying on the domestic law of the chosen EU Member State court by the parties: the nominated court will ‘have jurisdiction, unless the agreement is null and void as to its substantive validity under the law of that Member State'.

Recital 20 of the Brussels I Regulation (recast) explains that the substantive validity is determined by national roles, including their conflict of laws rales: ‘Where a question arises 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, that question should be decided in accordance with the law of the Member State of the court or courts designated in the agreement, including the conflict-of-laws rules of that Member State’.

Thus the substantive validity is left to the lex fori or the national law of the EU Member State applying its conflict of laws rules (allowing renvoi). Article 25 of the Brussels I Regulation (recast) is applicable to the formal and substantive validity of the choice of forum agreement and not to the choice of law. However, rendering a jurisdiction agreement invalid due to the ‘consequences on the substantive law to be applied’ lies outside the scope of Article 25 of Brussels I (recast), according to Basedow.^[3] Hence, the substantive national law does not determine consent, although it is applicable to the offer and acceptance, as well as to the legal capacity of the parties and, in cases of fraud, duress or mistake.

When the Brussels I Regulation (recast) is not applicable because the parties have agreed to another forum or an arbitral tribunal to discuss any dispute arising out of the contract, then domestic laws are applicable. Here are illustrative examples of such domestic laws:

• (1) Under domestic Spanish law, there is a doctrinal discussion as to whether to consider jurisdiction agreements as a matter of procedural law or substantive law.
• (2) According to German scholars, choice of forum agreements are best classified as a matter of both substantive and procedural law. Garau Sobrino points out that German judges classify jurisdiction agreements as a ‘substantive contract with procedural relations’.
• (3) Domestic English and Welsh Civil Procedure Rules (CPR) deal only with the enforcement of arbitration clauses but not their validity; other instruments at the EU level such as the Brussels I Regulation (recast) may be applicable to the case; as Sparka points out, a choice of court agreement is valid according ‘to its putative governing law’ although a choice of English law is frequently suggested if the parties have agreed to refer any disputes to English courts.

Basedow proposes the introduction of ‘a more fine-tuned instrument’ to ‘address not the validity of the clause, but the exercise of the rights flowing from it. [These] may be abusive in particular circumstances’. He remarks that ‘the basis for the judicial review of the jurisdiction clause should not be sought in the national law of any Member State, but in the law of the Union'.^[4] The Brussels I Regulation (recast) ‘must be interpreted as meaning that an oral agreement on the place of performance which is designed ... to establish that the courts for a particular place have jurisdiction, is ... governed by’ Article 25, ‘and is valid only if the requirements set out therein are complied with’.

In assessing agreements that choose a jurisdiction outside the EU, the EU Member State court will rely on its lex fori and not on Article 25 of the Brussels I Regulation (recast) to assess if the agreement is manifestly contrary to public policy. Thus Article 25 of Brussels I (recast) permits prorogatio fori and derogatio fori and allows the parties, regardless of whether they are domiciled inside or outside the EU, to agree to submit their disputes to the courts of a Member State.

• [1] Geert Van Calster, European Private International Law (Bloomsbury 2016) 82-89. 2 Beatnz Anoveros Tenadas, ‘Restrictions on Jurisdiction Clauses in Consumer Contracts within the European Union’ (2003) Oxford U Comparative L Forum 1 accessed 15 January 2018; Jerzy Jodlowski, ‘Les conventions relatives à la prorogation et à la dérogation à la compétence mtemationale en matière civile’ in Collected Courses of the Hague Academy of International Law (Vol. 143) (Sijthoff 1974-Ш) 483.
• [2] Michael Bogdan, Concise Introduction to EC Private International Law (Europa Law 2012) 64; Burkhard Hess, Europäisches Zivilprozessrecht (CF Müller 2010) para 6-137, 314; Miguel Virgos Soriano and Francisco Garcimartin Alférez, Derecho procesal civil internacional: litigación internacional (2nd edn, Tlionison-Civitas 2007) 280. Different solutions are discussed by Hélène Gaudemet-Talion, Compétence et exécution des jugements en Europe: règlement no 44-2001, conventions de Bruxelles 1968, et de Lugano 1988 et 2007, no 152 (4th edn, LGDJ 2010) 140-141; Jürgen Basedow, ‘Exclusive Choice-of-Court Agreements as a Derogation from Imperative Norms’, in Patnk Lindskoug and others (eds), Essays in Honour of Michael Bogdan, Juristförlaget i Lund (2013) 15-31. 2 Trevor C Hartley, Choice-of-court Agreements under the European and International Instruments (OUP 2013) 133. 3 Renvoi is valid concerning the choice of forum under Brussels I (recast), in contrast to Article 20 of the Rome I Regulation that excludes it: ‘The application of the law of any country specified by tins Regulation means
• [3] Basedow (n 25). 2 Silvia Felm Álvarez de Sotomayor, ‘Nulidad de las cláusulas de jurisdicción y ley aplicable a la luz de la ley 3/2014 por la que se modifica el texto refundido de la ley general para la defensa de consumidores y usuarios’ (2015) 29 Revista Electrónica de Estudios Internacionales (REEI), 5. In Gennany, see Ramer Hausmann, ‘Einheitliche Anknüpfung internationaler Gerichtsstands- und Schiedsvereinbarungen?’ in Bernhard Pfister and Michael R Will (eds), Festschrift für Werner Lorenz zum siebzigsten Geburtstag (Mohr Siebeck 1991) 360-364; Dieter Martiny, ‘vor Artikel 27’, in Franz Jürgen Sacker and Kurt Rebmann (eds), Münchener Kommentar zum Bürgerlichen Gesetzbuch (CH Beck 1990) NM 50. In Spam, see Manuel Pelaez del Rosal, La competencia territorial en el proceso civil: el acuerdo de sumisión expresa (Ariel 1974) 167; Alfonso-Luis Calvo Caravaca and Julio Diego González Campos, La sentencia extranjera en España y la competencia del juez de origen (Tecnos 1986) 74; Ana Quiñones Escámez, 'Evolución de la admisibilidad de la cláusula atributiva de competencia internacional en derecho español y comparado’ (1987) 86(3) Revista jurídica de Catalunya 657, 660. 3 Federico F Garau Sobrino, ‘Los acuerdos atributivos de jurisdicción en Derecho Procesal Civil Internacional español’ (2010) 2(2) Cuadernos de Derecho Transnacional 52; Sparka (n 7) 81-98. 4 Civil Procedure Rules of England and Wales, approved by the Civil Procedure Act 1997 (amended 8 August 2016). 5 Sparka (n 7) 19-38.
• [4] Basedow (n 25). 2 Case C-106/95 MSG v. Les Gravières Rhénanes SARL EU:C:1997:70, [1997] ECR1-911 [35]. 3 Basedow (n 25) 15-31. 4 Case C-281/02 Andrew Owusu v. NB Jackson and others EU:C:2005:120, [2005] ECR 1-1383.