REVISION TO BRUSSELS I CONFERENCE

Litigation against third state parties: the planned changes

Paper by Seán Barton, McCann Fitzgerald 14th May 2011

1 Background

The Brussels I Regulation1 (“Brussels I”) has generally applied in the courts of the EU Member States since 1 March 20022. Brussels I largely replaced the Brussels Convention 19683 (“Brussels 1968”), but it did not significantly change the structure or the detailed content of the 1968 Convention’s provisions. Like the Brussels and Lugano Conventions before it, Brussels I aims to apply uniform standards for jurisdiction in civil and commercial matters and to simplify the formalities governing the rapid recognition and enforcement of judgments by a simple and uniform procedure. In parallel to the Brussels Convention, a Convention taking up the principles of the Brussels Convention as among the EU Member States and those then of the European Free Trade Association (except Liechtenstein) was signed at Lugano in 1988 (“Lugano 1988”). The content of the rules contained in Brussels I is replicated in the Lugano Convention 20074 (“Lugano 2007”), which is gradually replacing Lugano 1988 in cases

1 Council Regulation (EC) No.44/2001 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters.

2 It has applied from 1 May 2004 in the cases of the ten Member States who acceded joined in 2004 and from 1 January 2007 as regards Bulgaria and Romania. It has applied through bilateral means (see below) in respect of Denmark since 1 July 2007.

3 What we now generally refer to as the “Brussels Convention” is the third version of that Convention. The original Convention was concluded on 27 September 1968 among the six founding EC Member States, and was modified on the accession to it of Ireland, the United Kingdom and Denmark in October 1978. Greece acceded to the (modified) Convention in October 1982 and the Convention was re-modified (by the San Sebastián Convention) on the accession of Spain and Portugal in May 1989. Austria, Sweden and Finland (which had previously adhered to the Lugano Convention) acceded to the (post-San Sebastián) Brussels Convention in 1996. A protocol on the interpretation of the Convention by the EC Court of Justice was signed in 1971 (and amended on the accessions described). The Convention and Protocol are regarded as part of the “acquis communautaire”.

4 Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, done at Lugano on 30 October 2007, as approved on behalf of the European Community by Council Decision 2009/430/EC of 27 November 2008; Lugano 2007 is to be given further effect in the State by the Jurisdiction of Courts and Enforcement of Judgments (Amendment) Bill 2011.

involving Member States and European Economic Area States who are not EU Member States5. Both the Brussels and Lugano Conventions had been undergoing revision from

December 1997 and, before the entry into force of the Amsterdam Treaty in May 1999,

the EC Commission had proposed a new Convention intended to improve existing

measures in the Brussels and Lugano Conventions: those proposed improvements found

their way into Brussels I and ultimately into Lugano 2007.

The inclusion of Justice and Home Affairs in the Treaties post-Amsterdam changed (too

controversially for Denmark) the legal basis on which the Brussels I rules take effect.

Prior to the adoption of the Amsterdam Treaty in 1997, the EU Member States had

generally addressed issues of judicial co-operation, jurisdiction, service of judicial

documents and the recognition and enforcement of judgments given by national courts

as matters of intergovernmental and bilateral co-operation and had concluded or joined

in a number of conventions for these purposes. A key innovation of the Amsterdam

Treaty was to bring a substantial part of the “Third Pillar” (justice and home affairs)

within the Community’s sphere of responsibility. Under Article 2 of the revised Treaty on

European Union (“TEU”), the EU established for itself the objectives of maintaining and

developing the Union as an area of freedom, security and justice, in which the free

movement of persons is assured and maintaining and building on the acquis

communautaire. In particular, the legal bases for Brussels I were identified post-

Amsterdam as Articles 61(c) and 67(1) of the Treaty establishing the European

Community (“TEC”). Since the entry into force of the Lisbon Treaty, the corresponding

legal bases are Article 81(2)(a), (c) and (e) of the Treaty on the Functioning of the

European Union (“TFEU”).

2 The opt-outs

Ireland, the United Kingdom and Denmark had reservations as to participation in

measures adopted pursuant to Title IV, TEC, which were the subject of two Protocols

annexed to the TEU and TEC, which had the effect that Denmark does not participate in

the adoption of (and is not bound by) legislation grounded on the legal basis of Title IV

and that Ireland and the United Kingdom each has an option as to whether to

participate in the adoption of, and to apply, legislation adopted on that legal basis. Thus

far, Ireland and the UK have generally participated. Similarly, Title V of Part Three of

the TFEU is not applicable to Denmark by reason of the Protocol on the position of

Denmark annexed to the Treaties. However, the rules of Brussels I have been extended

5 Lugano 2007 has applied since 1 January 2010 as regards Norway and since 1 January 2011 as regards Switzerland. Iceland, the only state to which the 1988 Lugano Convention now remains relevant for practical purposes, is expected to pass its ratification bill for Lugano 2007 in 2011.

to Denmark by virtue of a bilateral agreement6, which contains a mechanism which

enables Denmark to apply any instrument modifying Brussels I. Again, Title V of Part

Three of the TFEU is not applicable to Ireland and the United Kingdom, unless those two

countries decide otherwise, in accordance with the relevant rules of the Protocol on their

position in respect of the area of Freedom, Security and Justice.

It is common for the EU Justice and Home Affairs measures to include inbuilt review

clauses, i.e. that the Commission will review and report on the operation of the measure

after a period of about five years, and where necessary, make proposals for

improvement. A review of Brussels I was undertaken by a group of rapporteurs

assembled by the University of Heidelberg, which reported in 20077.

3 The Heidelberg recommendations

The Heidelberg Report made a number of key recommendations for reform, many of

which have found their way into the current revision, including:

• in relation to arbitration, that either Article 1(2)(d) of Brussels I (exclusion of arbitration) be deleted and to preserve the prevalence of the New York Convention by Article 71, or to address the interfaces between arbitration and Brussels I in a positive, comprehensive way and to include a specific provision in Brussels I on supporting arbitration proceedings 8;

• finding a simpler solution to determining the issue of the time when a court’s jurisdiction is engaged (Article 26, Brussels I);

• attempting to find an autonomous definition to determine the domicile of natural persons;

• extending Articles 5 and 6 at least to cases involving third state defendants and allowing a reference to national law only on the basis of a residual provision, because Article 4(2) results into an unequal system of access to justice in third state cases9;

• establishing a (non-exclusive) forum based on the situs of movable property where movable property is the subject of the proceedings;

• dealing with the issue of civil jurisdiction as an annex to criminal jurisdiction;

• narrowing the scope of Article 22(1) in favour of a more flexible approach so as to remove the exclusive jurisdiction of the situs of the property in contracts

6 Agreement between the European Community and the Kingdom of Denmark on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters annexed to Council Decision No. 2005/790/EC of 20 September 2005 (OJ L 299/61 of 16 November 2005) signed at Brussels on 19 October 2005 and approved on behalf of the Community by Council Decision No. 2006/325/EC of 27 April 2006 (OJ L 120/22 of 5 May 2006).

7 Hess et al, Study JLS/C4/2005/03: “Report on the Application of Regulation Brussels I in the Member States”, September 2007.

8 Heidelberg Report, para 864. 9 Heidelberg Report, para 875.

relating to rent of office space, and reviewing the application of exclusive jurisdiction in cases concerning the rent of holiday homes;

• harmonising the law relating to the formation of choice of forum agreements with regard to the Common Frame of Reference for European Contract law and to the Hague Convention on Choice of Forum Agreements10;

• as regards lis pendens, creating a narrow exception from the rule of strict priority under Article 27 of Brussels I, in conformity with the decision of the European Court of Justice in Erich Gasser Gmbh v MISAT Srl11, releasing the court designated in an exclusive choice of court (or choice of jurisdiction or forum agreement, but here referred to for consistency as a choice of court agreement) from its obligation to stay proceedings under Article 27 and tolerating parallel proceedings if the risk of conflicting decisions on jurisdiction can be minimised, or a limitation in time, e.g. of six months, of the priority of the court first seised under Article 27, possibly coupled with the introduction of a standard form agreement that should help accelerating in particular the decision of the court first seised12;

• a general abolition of exequatur proceedings in the framework of Brussels I, with sufficient procedural and substantive safeguards of the parties’ legal positions13;

• a separate regime for the recognition of cross-border injunctions;

• a provision vesting the courts of the Member States having jurisdiction over the substance of the matter with the power to set aside or to modify in pursuance of their own law a provisional or protective order granted by a court of another Member State.

4 The Proposed Revision

In April 200914, the European Commission presented its Report, based on the Heidelberg

Report’s conclusions, accompanied by a Green Paper, which raised questions on the

operation of Brussels I, and invited responses from interested parties. Following this

initial consultation process, the Commission published its proposal to recast Brussels I

(the “Proposed Revision”) on 14 December 201015, which includes a number of

particularly controversial elements. The Member States who have an opt-out or opt-in

are required to decide within three months of publication of the Commission proposal

10 Council Decision 2009/397/EC on the signing on behalf of the European Community of the Convention on Choice of Court Agreements (OJ L133/1 of 29 May 2009) authorises the President of the Council, on behalf of the EU (including Ireland and the UK but excluding Denmark), to sign the Convention, subject to the conclusion of the Convention at a later date.

11 [2004] 3 W.L.R. 1070; [2005] All E.R. (EC) 517. 12 Heidelberg Report, paras 890-891. 13 Heidelberg Report, paras 900-905. 14 Report from the Commission to the European Parliament, the Council and the Economic and Social Committee

on the application of Council Regulation (EC) No 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, COM (2009) 174 final (Report) and COM (2009) 175 final (Green Paper).

15 COM (2010) 748 final.

whether or not to take part in the adoption and application of the proposed measure

and, true to form, though both slightly late, both Ireland16 and the UK17 have opted in.

Four areas of significant controversy for common law jurisdictions have been identified18

in the Proposed Revision, being (1) the response to the circumvention of choice of court

agreements by pre-emptive litigation in the courts of a Member State other than that

previously “chosen”; (2) the uncertain boundary between the civil jurisdiction rules of

Brussels I and the operation of arbitration; (3) the difficulties attendant on beginning

proceedings in an EU Member State against a non-EU domiciled defendant; and (4) the

obstacles of time and cost associated with the exequatur procedure in respect of the

recognition and enforcement in one Member State of judgments given in another. It is

proposed here to make some observations on the first and fourth areas, and to focus

then on the third.

5 A reminder of the fundamental principle of jurisdiction in Brussels I

The fundamental principle in Brussels I is that the defendant’s domicile is the general

criterion by which jurisdiction is engaged, though special provisions are made for

particular categories of litigation (in particular contract and tort actions) and particular

categories of litigants (in particular insureds, consumers and employees). It enables EU

courts to grant provisional or protective measures in support of proceedings in other

Member States and deals with the recognition and enforcement of certain judgments

given, and certain instruments executed or done, in other Member States. Accordingly,

Brussels I governs the circumstances in which parties domiciled in other EU States may

be brought into Irish “civil or commercial” proceedings and vice versa.

The ambitious proposal to extend the rules in Brussels I to disputes involving parties

domiciled in third states will highlight again some traditional differences as among the

Member States’ approaches to proceedings involving such parties. Brussels I has always

had as its starting point jurisdiction based on domicile (though the rules in Brussels I are

themselves supplemented by measures as regards service of process, currently found in

Regulation 1393/200719). This has not traditionally been the case in the common law

countries, where jurisdiction in personam has always been capable of being engaged if

the defendant can be served with process in the jurisdiction (regardless of the

defendant’s domicile) or, in circumstances defined by statute or, more likely, rules of

court, if the defendant is permitted by the court to be served outside the jurisdiction.

The foundation of the court’s jurisdiction in the common law countries has traditionally

16 Dáil resolution of 31 March 2011: http://debates.oireachtas.ie/dail/2011/03/31/00007.asp 17 Statement by Lord McNally , Minister of State, Ministry of Justice on 5 April 2011:

http://www.publications.parliament.uk/pa/ld201011/ldhansrd/text/110405-wms0001.htm#1104069000378# 18 Carruthers, “The Brussels I Regulation recast”, 7 Scots Law Times (2011), 31-35. 19 Regulation (EC) No 1393/2007 of the European Parliament and of the Council of 13 November 2007 on the

service in the Member States of judicial and extrajudicial documents in civil or commercial matters (service of documents), and repealing Council Regulation (EC) No 1348/2000; OJ L 324, 10 December 2007, p. 79.

not related to domicile, but to the ability to serve process20. The revisions proposed

seem ultimately to aspire to harmonising the rules as affecting potential defendants in

third states to a starting point of domicile also.

6 Supporting choice of court agreements (Articles 29.2 and 32.2 of the

Proposed Revision)

The effectiveness of the lis pendens/priority system in Brussels I was dealt a serious

blow by the European Court of Justice in Erich Gasser. The effect of that judgment is

that a choice of court agreement in favour of one Member State’s court cannot prevail

against the claim to jurisdiction of another Member State’s court which has been seised

first by a party to the contract, even where the invocation of that jurisdiction is in

apparent (or even flagrant) breach of the choice of court agreement. The court first

seised in time is not fundamentally required by Brussels I to defer to a court which the

parties have freely chosen much earlier, in the contract between them. Argument on

the applicability of the choice of court clause or as to its validity must be dealt with

before the court first seised. The problem which has emerged has not so much been

that a court first seised will not ultimately decline jurisdiction, if satisfied that a valid and

applicable exclusive choice of court clause was entered by the parties, but more the

length of time which the first court can take to decide the jurisdiction question. Where

this delay was exploited by the party in breach, the effect, which added uncertainty and

expense for the party which actually sought to perform the choice of court agreement,

became known as the “Italian torpedo”.

The Proposed Revision recognises that an adjustment (essentially a reversal of priority)

was necessary in the relationship between Article 23 (choice of court agreements) and

Article 27 (lis pendens) to provide greater protection to choice of court agreements.

The Commission explains21:

“The proposal includes two amendments which aim at improving the effectiveness of

choice of court agreements:

Where the parties have designated a particular court or courts to resolve their dispute,

the proposal gives priority to the chosen court to decide on its jurisdiction, regardless of

whether it is first or second seised. Any other court has to stay proceedings until the

chosen court has established or – in case the agreement is invalid – declined

jurisdiction. This modification will increase the effectiveness of choice of court

agreements and eliminate the incentives for abusive litigation in non-competent courts.

20 See Dicey, Morris & Collins, “The Conflict of Laws”, 14th Edition Volume 1, paragraph 11-003. 21 Proposed Revision, para 3.1.3.

Moreover, 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 seised.

Both modifications reflect the solutions established in the 2005 Hague Convention on the

Choice of Court Agreements, thereby facilitating a possible conclusion of this Convention

by the European Union.”.

The Proposed Revision provides in Articles 29 (what was Article 27 of Brussels I) and 32

(what was Article 29 of Brussels I) that where parties have designated a particular court

in which to resolve their dispute, priority should be given to that court to decide on its

jurisdiction, regardless of whether it is the first or second seised. Any other court

attempted to be seised is required to stay proceedings until such time as the “chosen”

court has established or declined jurisdiction. The relevant provisions of the Proposed

Revision read as follows (new provisions are underlined):

“29.1. Without prejudice to Article 32(2), where proceedings involving the same cause of

action and between the same parties are brought in the courts of different Member

States, any court other than the court first seised shall of its own motion stay its

proceedings until such time as the jurisdiction of the court first seised is established.

2. In cases referred to in paragraph 1, the court first seised shall establish its jurisdiction

within six months except where exceptional circumstances make this impossible. Upon

request by any other court seised of the dispute, the court first seised shall inform that

court of the date on which it was seised and of whether it has established jurisdiction….

32.1. Where actions come within the exclusive jurisdiction of several courts, any court

other than the court first seised shall decline jurisdiction in favour of that court.

2. With the exception of agreements governed by Sections 3, 4 and 5 of this Chapter,

where an agreement referred to in paragraph 1 confers exclusive jurisdiction to a court

or the courts of a Member State, the courts of other Member States shall have no

jurisdiction over the dispute until such time as the court or courts designated in the

agreement decline their jurisdiction.”

7 Abolition of exequatur (Articles 37 to 46 of the Proposed Revision)

The expression “exequatur” (literally, “let it be executed”) stems from the ancient

practice of a local judge endorsing a judgment emanating from another tribunal, as a

permission and authority to a relevant officer to execute it within the territorial

jurisdiction of the judge who endorsed the judgment. The use of an exequatur

procedure in Brussels I has meant that civil and commercial judgments do not

automatically have a passport to enforcement throughout the EU, but must undergo an

intermediate step of “declaration of enforceability” in any Member State other than that

in which the judgment is issued before enforcement is possible.

The effect of Article 38 of Brussels I in Ireland has been that a judgment given in

another Member State and enforceable in that state shall be enforced in Ireland when,

on the application of an interested party (invariably the plaintiff) to the Master of the

High Court22, the judgment has been declared enforceable here. As legitimate

challenges to the grant of declarations of enforceability are very few in number and very

rarely successful, the Commission concluded that it is difficult to justify the expense

occasioned to litigants by the exequatur procedure in an internal market without

borders.

The proposed abolition of exequatur generally for civil and commercial judgments

reflects the incremental movement towards closer harmonisation in justice and home

affairs, and seems to be a logical next step following the adoption of the European

Enforcement Order for uncontested claims, European Order for Payment Procedure and

European Small Claims Procedure, all of which involve elements give rise to a complete

freedom of circulation of judgment within their respective material scope, as they equate

the foreign “judgment” concerned entirely with a corresponding domestic one by

completely eliminating any exequatur procedure.23. A practical consequence of the

abolition of exequatur would of course be the reduction of the number of applications

under Order 42A of the Rules of the Superior Courts (“RSC”) for recognition and liberty

to enforce EU judgments, which in future appear likely to be confined to the exceptional

cases identified in the proposed Article 37.

The effect of the Proposed Revision in this respect would be to shift the balance of

responsibility for ensuring adherence to fair procedures between the parties in the

litigation from the court of enforcement to the court of origin. The Commission is at

pains to assert that it will ensure that sufficient safeguards are in place to permit the

judgment debtor to apply for review of the judgment; its rationale for proposing the

abolition of exequatur in the context of civil and commercial judgments at this point is

expressed as follows24:

“Civil judicial cooperation has developed in the context of the creation of an internal

market in Europe based on the premise of mutual recognition of judgments. Such

mutual recognition has been gradually improved by lowering the controls with respect to

foreign judgments in the Union. Today, judicial cooperation and the level of trust among

Member States has reached a degree of maturity which permits the move towards a

simpler, less costly, and more automatic system of circulation of judgments, removing

the existing formalities among Member States.

22 By virtue of the European Communities (Civil and Commercial Judgment) Regulations 2002 (S.I. 52 of 2002) and Order 42A, RSC.

23 Regulations No. 805/2004 of 21 April 2004 creating a European Enforcement Order for uncontested claims, No. 1896/2006 of 12 December 2006 creating a European order for payment procedure, No. 861/2007 of 11 July 2007 establishing a European Small Claims Procedure.

24 Proposed Revision, para 3.1.1.

The proposal therefore abolishes the exequatur procedure for all judgments covered by

the Regulation's scope with the exception of judgments in defamation and

compensatory collective redress cases. The abolition of exequatur will be accompanied

by procedural safeguards which ensure that the defendant's right to a fair trial and his

rights of defence as guaranteed in Article 47 of the EU Charter on Fundamental Rights

are adequately protected….

The defendant would have three main remedies at his disposal by which he could

prevent in exceptional circumstances that a judgment given in one Member State takes

effect in another Member State: first, he would be able to contest the judgment in the

Member State of origin if he was not properly informed about the proceedings in that

State. Second, the proposal would create an extraordinary remedy in the Member State

of enforcement which would enable the defendant to contest any other procedural

defects which might have arisen during the proceedings before the court of origin and

which may have infringed his right to a fair trial. A third remedy would enable the

defendant to stop the enforcement of the judgment in case it is irreconcilable with

another judgment which has been issued in the Member State of enforcement or -

provided that certain conditions are fulfilled – in another country. These safeguards

address the situations which are currently addressed by certain of the existing refusal

grounds, in particular in order to ensure the protection of the rights of the defence, with

the key difference that control of substantive public policy is abolished. As such, the

time and costs of the exequatur procedure will be saved while the necessary protection

of defendants will remain ensured.

The proposal also contains a series of standard forms which aim at facilitating the

recognition or enforcement of the foreign judgment in the absence of the exequatur

procedure as well as the application for a review under the procedure safeguarding the

rights of defence described above. These forms will facilitate the enforcement of the

judgment by the competent authorities, in particular where interest and costs have to be

calculated. They also reduce the need for a translation of the judgment and ease the

application for a review of the judgment by the defendant who has to act in another

Member State.

The proposal retains the exequatur procedure for judgments in defamation cases in

which an individual claims that rights relating to his personality or privacy have been

violated by the media. These cases are particularly sensitive and Member States have

adopted diverging approaches on how to ensure compliance with the various

fundamental rights affected, such as human dignity, respect for private and family life,

protection of personal data, freedom of expression and information.”

Articles 38 and 39 of the Proposed Revision provide:

“38.1. Subject to the provisions of this Chapter, a judgment given in a Member State

shall be recognised in the other Member States without any special procedure being

required and without any possibility of opposing its recognition.

2. A judgment given in one Member State which is enforceable in that State shall be

enforceable in another Member State without the need for a declaration of

enforceability.”

39.1 A party who wishes to invoke in another Member State a judgment recognised

pursuant to Article 38 (1) shall produce a copy of the judgment which satisfies the

conditions necessary to establish its authenticity.

2. The court before which the recognised judgment is invoked may, where necessary,

ask the party invoking it to produce a certificate issued by the court of origin using the

form set out in Annex I and to provide a transliteration or a translation of the contents

of the form in accordance with Article 69…”.

It seems appropriate that a required form of certificate (Annex I) should be provided, in

line with what is currently done for Brussels I and as is done for European Enforcement

Orders, though Article 39(2) as currently expressed does not make production of the

certificate mandatory in every case.

Exceptions are identified in Article 37(3) of the Proposed Revision, where the current

requirement of a declaration of enforceability would continue, at least on a transitional

basis, for judgments:

“(a) concerning non-contractual obligations arising out of violations of privacy and rights

relating to personality, including defamation, and

(b) in proceedings which concern the compensation of harm caused by unlawful

business practices to a multitude of injured parties and which are brought by

i. a state body,

ii. a non-profit making organisation whose main purpose and activity is to represent and

defend the interests of groups of natural or legal persons, other than by, on a

commercial basis, providing them with legal advice or representing them in court, or

iii. a group of more than fifteen claimants.”

The categories included as exceptions are identified because of their sensitivity and/or

because of the degree of inconsistency in the availability or substance of the relevant

cause of action and the means of assessing such claims among the Member States. The

establishment of such exceptions seems appropriate where these considerations arise

and the existing exequatur procedure would continue to apply in the exceptional cases,

so far as any judgment concerned is “civil or commercial”.

There would, however, seem to be some risk that cases might occur where doubt arises

about whether the exception properly arises, for example, where a single amount of

damages is awarded in proceedings which include a claim for breach of contract and a

claim for defamation. It seems doubtful that a judgment for such damages could be

severed into component parts by a court before which enforcement was sought, where

the court of origin had not split the damages by reference to the different causes of

action. It may be that because Article 37(3) of the Proposed Revision refers to

judgments “concerning” the relevant litigation, that this Article should be engaged where

any part of the judgment relates to a claim of a kind mentioned in Article 37(3)(a) or

(b), even if other parts of the same judgment would require recognition without any

intermediate step. Plainly, Article 39(2) would authorise the court before which a

judgment is invoked (or sought to be enforced) to ask for the certificate of the court of

origin when it considers there is a possibility that the judgment concerned falls within

Article 37(3).

In relation to safeguards available to the defendant, concerns obviously arise about the

removal of the ability to resist enforcement where the foreign judgment is thought to be

contrary to public policy. (Where recognition is automatic under sub-section 2 of section

1 of Chapter III, the only ground on which enforcement can be refused is

irreconcilability with an earlier judgment). While instinct suggests that it is dangerous to

abandon such a useful ground of resistance of enforcement, it does not appear that in

fact the public policy exception has been raised successfully in many (if indeed any)

cases in Ireland25 since the original Brussels Convention came into force, so any such

concern may be more conceptual than real.

The EC Court of Justice has repeatedly emphasised that the public policy exception

(currently in Article 34 of Brussels I) is very narrow indeed: the exception has been

allowed as a basis for refusing enforcement where the defendant was not allowed to

have a defence presented on his behalf in his absence (but not because a French court

based its jurisdiction in civil proceedings on the engagement of French jurisdiction in

parallel criminal proceedings for involuntary manslaughter on the fact that the victim

was a French national26. More recently, the Luxembourg court has been even more

circumspect about whether the fact that the court of the state of origin refused to hear

the defendant necessarily engages the public policy exception (where the defendant was

excluded from the proceedings by order on the ground that he had not complied with

obligations imposed by an order made earlier in the same proceedings) and suggested

25 The appeal failed in Westpac Banking Corporation v Dempsey [1993] 3 IR 331, one of the very few reported cases in Ireland in which the public policy exception was raised. Of course, as enforceability has been required to be declared inaudita altera parte under Article 41 of Brussels I, after satisfaction only as to completion of the required formalities and without any review by the court of the Member State of enforcement of its own motion of any of the grounds for non enforcement provided for by Brussels I, so it was only where the defendant appealed the declaration of enforceability, that the court of the Member State of enforcement could examine any grounds claimed to support non-enforcement.

26 Case C-7/98 Krombach v Bamberski [2000] All ER (D) 409.

that this will only be so if, following a comprehensive assessment of the proceedings

and in the light of all the circumstances, the exclusion constituted a “manifest and

disproportionate infringement of the defendant’s right to be heard”27. It has also held

that the fact that a judgment given by the court of origin concerns land situated in an

area of that state over which its Government does not exercise effective control, and

cannot, as a practical matter, be enforced where the land is situated does not constitute

a ground for refusal of recognition or enforcement under Article 34 of Brussels I28.

Perhaps then the general removal of the public policy exception is not great loss after

all.

One aspect which the Commission has not proposed to harmonise is the subsidiary rules

in relation to recognition and enforcement of civil and commercial judgments originating

outside the EU29. This is despite the fact that the Proposed Revision does include a

proposal to harmonise the subsidiary rules in relation to the exercise of jurisdiction over

defendants in such states. The justification for the latter is that it would remove

inconsistency in access to justice within the EU and the same justification would seem to

arise in relation to the former. Certainly it seems highly likely that as there will be

inconsistencies in the ability to give effect to third state civil and commercial judgments

within the EU, questions will inevitably arise about why harmonisation in that regard

should not occur, where recognition and enforcement of “foreign judgments” is a

central feature of Brussels I.

8 The proposed extension of the rules on jurisdiction to disputes

involving third state defendants (Articles 4 to 26)

The Brussels I regime has had effects not just within the Member States but also

externally. The focus of the Brussels I regime has been the EU Member State-domiciled

defendant. The 1968 Convention applied, and Brussels I applies, to all defendants

domiciled within a Member State when proceedings are instituted, even where the

plaintiff is domiciled in a non- Member State. The Commission’s Green Paper reflected

an increasing concern for the position of Member State-domiciled plaintiffs, particularly

in dealings with non-EU domiciled defendants, or “third state defendants”.

In the Proposed Revision, the Commission explains that: “Access to justice in the EU is

overall unsatisfactory in disputes involving defendants from outside the EU … The

diversity of national law leads to unequal access to justice for EU companies in

transactions with partners from third countries: some can easily litigate in the EU, others

27 Case C-394/07 Gambazzi v Daimler Chrysler, judgment of 2 April 2009. 28 Case C-420/07 Apostolides v Orams, judgment of 28 April 2009. See also Case C-38/98 Regie Nationale des Usines

Renault SA v Mexicar SpA [2000] All ER (D) 639. 29 The Revised Proposal explicitly provides that it does not affect conventions to which Member States or parties

and which in relation to particular matters “govern jurisdiction or the recognition or enforcement of judgments” (Article 82). However, the Revised Proposal does not express any position about impact or otherwise on non-convention-based national rules relating to the recognition of judgments.

cannot, even in situations where no other court guaranteeing a fair trial is competent. In

addition, where national legislation does not grant access to court in disputes with

parties outside the EU, the enforcement of mandatory EU law protecting e.g.

consumers, employees or commercial agents is not guaranteed”.30

The Commission therefore proposes to extend the jurisdictional rules of Brussels I to

disputes involving third state defendants, in effect by harmonising the residual or

subsidiary national jurisdictional rules of the Member States in cases involving third state

defendants. It was the use of residual national rules which historically allowed the

invocation of the doctrine of forum non conveniens, so that when an Irish court was

seised under residual national rules of jurisdiction, it could, until the judgment in Owusu

v Jackson31 decline (or defer exercising) jurisdiction on the basis of forum non

conveniens to a court in another EU Member State, or in a non-Member State.

Currently, as against non-EU Member State-domiciled defendants, residual national rules

may be used (in accordance with Article 4 of Brussels I), in Ireland’s case, the rules

reflected in Order 11, RSC and the corresponding Circuit Court Rules (Order 13) and

District Court Rules (Order 11).

The Commission explains its thinking in this regard in the following terms32:

“Several modifications are proposed with the aim of improving the functioning of the

Regulation in the international legal order.

• The proposal extends the Regulation's jurisdiction rules to third country defendants.

This amendment will generally extend the possibilities of companies and citizens to sue

third country defendants in the EU because the special rules of jurisdiction which e.g.

establish jurisdiction at the place of contractual performance become available in these

cases. More specifically, the amendment will ensure that the protective jurisdiction rules

available for consumers, employees and insured will also apply if the defendant is

domiciled outside the EU.

• The proposal further harmonises the subsidiary jurisdiction rules and creates two

additional fora for disputes involving defendants domiciled outside the EU. First, the

proposal provides that a non-EU defendant can be sued at the place where moveable

assets belonging to him are located provided their value is not disproportionate to the

value of the claim and that the dispute has a sufficient connection with the Member

State of the court seised. In addition, the courts of a Member State will be able to

exercise jurisdiction if no other forum guaranteeing the right to a fair trial is available

and the dispute has a sufficient connection with the Member State concerned ("forum

necessitatis"). The harmonisation of subsidiary jurisdiction ensures that citizens and

30 Proposed Revision, para 2.1. 31 [2005] ECR I-01383. 32 Proposed Revision, para 3.1.2.

companies have equal access to a court in the Union and that there is a level playing

field for companies in the internal market in this respect. The harmonised rules

compensate the removal of the existing national rules. First, the forum of the location of

assets balances the absence of the defendant in the Union. Such a rule currently exists

in a sizeable group of Member States and has the advantage of ensuring that a

judgment can be enforced in the State where it was issued. Second, the forum of

necessity guarantees the right to a fair trial of EU claimants, which is of particular

relevance for EU companies investing in countries with immature legal systems.

• The proposal introduces a discretionary lis pendens rule for disputes on the same

subject matter and between the same parties which are pending before the courts in the

EU and in a third country. A court of a Member State can exceptionally stay proceedings

if a non-EU court was seised first and it is expected to decide within a reasonable time

and the decision will be capable of recognition and enforcement in that Member State.

This amendment aims at avoiding parallel proceedings in and outside the EU.”

10 Discretion in leave to issue and serve

It would also seem that the requirement of Article 4(2) of the Proposed Revision that

persons not domiciled in any Member State may be sued in the courts of a Member

State only by virtue of the rules set out in Sections 2 to 8 of Chapter II would in essence

over-ride the current Irish subsidiary rules permitting service out of the jurisdiction in

civil and commercial matters (other than in cases where Brussels I itself applies), as

currently included in Order 11, rule 1 of the Rules of the Superior Courts (and the

corresponding provisions of the Circuit and District Court Rules).

Article 4.2 of the Proposed Revision reads:

“2. Persons not domiciled in any of the Member States may be sued in the courts of a

Member State only by virtue of the rules set out in Sections 2 to 8 of this Chapter.”

This over-riding of subsidiary rules seems to follow from what is said in draft recitals 16

and 17:

“(16) In order to promote the interests of claimants and defendants and promote the

proper administration of justice within the Union, the circumstance that the defendant is

domiciled in a third State should no longer entail the non-application of certain Union

rules on jurisdiction, and there should no longer be any referral to national law.

(17) This Regulation should therefore establish a complete set of rules on international

jurisdiction of the courts in the Member States. The existing rules on jurisdiction ensure

a close link between proceedings to which this Regulation applies and the territory of

the Member States which justifies their extension to defendants wherever they are

domiciled. In addition, this Regulation should determine the cases in which a court in a

Member State may exercise subsidiary jurisdiction.”

Proposed Article 24.2 prescribes a form of warning for all foreign defendants (which it

may be expected will ultimately be incorporated as an indorsement in all Irish originating

documents notice of which is served on foreign defendants):

“2. In matters referred to in Sections 3, 4, and 5 of this Chapter, the document

instituting proceedings or the equivalent document must contain information for the

defendant on his right to contest the jurisdiction of the court and the consequences of

entering an appearance33. Before assuming jurisdiction on the basis of this Article, the

court shall ensure that such information was provided to the defendant.”

This very direct excursion into the subsidiary rules of jurisdiction would appear likely to sweep away the remaining elements of discretion in common law courts within the EU as regards assuming jurisdiction over defendants domiciled in other states, whether they can be served with process within the jurisdiction or not. Heretofore, Irish courts, like the English, have retained a discretion to allow service out of the jurisdiction (in non-Brussels I cases) in the circumstances specified in Order 11, RSC. The principles on leave to serve out traditionally required that applicants show that each claim fell within a specific sub-rule (the sub-rules together exhausting the exceptional jurisdiction)34 and that foreign defendants had the benefit of any doubt. However, judgments in cases such as McKenna v EH35 and Re Euroking Miracle (Ireland) Limited, Fennell v Frost36 acknowledged that the principles in Order 11 could extend to cases where there is clear legislative intent to permit extraterritorial jurisdiction. In McKenna, leave was given pursuant to Order 11, rule 1(g) to serve abroad an application under the Proceeds of Crime Act 1996 for statutory injunctions freezing alleged proceeds of crime, to appoint a receiver, to require the respondent to make an affidavit of assets and means, and ultimately to transfer certain assets of the respondent to the State. The respondent applied to set aside leave, arguing that the injunctions sought were merely secondary or ancillary to the primary relief, were not themselves the substantive relief, and therefore leave could not be given, based on the rule in Caudron v Air Zaire37. Finnegan J held that the 1996 Act had conferred on the High Court a new jurisdiction and it was the duty of the courts to give effect to the intention of the Oireachtas in introducing it and that accordingly, a conflict between a rule of substantive law (such as the 1996 Act) and a rule of procedure (such as Order 11 and the cases which interpret it) should be resolved in favour of the substantive law. It was particularly important in the scheme of the 1996 Act, that the courts be empowered to make orders in the nature of statutory injunctions for the preservation of assets which may represent the proceeds of crime and, to give effect to the intention of the Oireachtas, it would be appropriate to include such orders within the compass of Order

33 It would seem to follow that entering an unqualified appearance would terminate any ability to contest

jurisdiction on the part of a third state defendant in the same way as it now does for a Member State defendant: Campbell International Trading House Limited v Van Aart [1992] 2 IR 305.

34 Shipsey v British & South American Steam Navigation Company [1936] IR 65. 35 [2002] 1 IR 72. 36 [2003] 3 IR 80. 37 [1986] ILRM 10.

11 rule 1(g), their statutory foundation and place within the scheme of the 1996 Act giving them a status greater than mere interim or interlocutory relief. In Euroking, the applicant liquidator sought an order that the respondent director be restricted in accordance with section 150 of the Companies Act 1990. The respondent was resident in the UK and Order 11, RSC did not make express provision for the service out of the jurisdiction of an originating notice of motion seeking a declaration pursuant to section 150. The applicant purported to serve the originating notice of motion on the respondent by sending it, with other documents, to the respondent's UK address as filed in the Companies Registration Office. Finlay Geoghegan J held that it was the clear intention of the Oireachtas in enacting section 150 of the 1990 Act that the court should have jurisdiction in respect of all persons who were directors of a company to which section 150 applied, irrespective of whether any particular director was resident in the State. While the circumstances of this case did not come within any of the cases specified in the exhaustive list in Order 11, rule 1, the wording of section 150 and the structure of Part VII of the 1990 Act amounted to a “contrary intention” which ousted the general principle of interpretation that the operation of a statute was to be confined to the territory of the State. The proposed revision to Article 4.2 establishes something akin to a comprehensive primary statutory basis for service of Irish proceedings on defendants in third countries as of right, rather than as a matter of discretion. Because it would apparently be an exhaustive basis, the ability of the Irish courts to continue to take the approach identified in McKenna and Euroking might be constrained, as least so far as the relevant proceedings could properly be characterised as civil or commercial.

11 Implications for Order 11, RSC

As the revised Article 4.2 would confer a right on intending plaintiffs to issue proceedings in Ireland as against defendants in third countries in the circumstances defined by the Revised Proposal, it would seem to follow that Order 11 could not survive in its current form, in which the Court may exercises a discretion to authorise the issue and service of proceedings. Though it can essentially be traced back to sections 31 and 34 of the Common Law Procedure Amendment Act (Ireland) 1853, the discretion now stems most directly from Order 11, rule 5, which requires an affidavit or other evidence showing a belief that the plaintiff has a good cause of action, provides that no leave shall be granted unless it shall be made “sufficiently to appear to the Court that the case is a proper one for service out of the jurisdiction”. The leave test has been expressed as examining whether there is “a serious or substantial legal question to be tried”, in terms of whether the merits of the plaintiff’s case warrants leave to serve abroad, given the principle of restraint when exercising jurisdiction over a foreign defendant38, and a consequence of beginning the proceedings with a leave application involving a threshold test means that, whether or not an application to set aside leave is made, the issue of

38 Seaconsar Far East Ltd v Bank Markazi Jomhouri Islami Iran [1994] 1 AC 438.

whether the court has jurisdiction may still be open at the trial of the action39: how the claim was pleaded and what matters were ultimately in issue might eventually determine whether the Court did or did not have jurisdiction. Because the Brussels I regime implies certainty at an early stage about which court has jurisdiction, it is doubtful whether any prospect that a question of jurisdiction can stay open until the trial can continue. The suggestion that issuing proceedings against third state defendants would become a

matter of right rather than one of discretion instinctively gives rise to a fear of vexatious

litigation against such defendants. However, that fear may be more conceptual than

real; there does not appear to have been a significant pattern of abusive proceedings

issued purportedly as of right under Brussels I or its predecessor Convention, and of

course the trade-off is that the foreign defendant can extinguish the proceedings

promptly and finally if the claim that there is jurisdiction is wrong.

In this context, third states may have legitimate grounds for objection to proposed

Article 23 (choice of court agreements), as it is not fully “reflexive” in effect: it does not

require that Member States’ courts decline jurisdiction where jurisdiction is explicitly

conferred by contract on the courts of a third state.

What might be envisaged is a revised form of Order 11 for civil and commercial matters, which bears significant similarities to the current Order 11A, and which could involve a form of originating document reciting the jurisdictional basis in the Revised Proposal which is relied on in the individual case. However, there should in principle be no difficulty with the Order 11 approach surviving for cases outside the scope of the Brussels I regime. Additionally, questions must arise about whether the circumstances or claim types in which discretion can currently be exercised under Order 11 and its correspondent provisions in the rules of the other courts would come within the scope of the Revised Proposal. Set out below is summary of the relevant limbs of Order 11, rule 1 and an outline view on what would appear to be the current correspondence, if any, in the Revised Proposal. Order 11 (discretion) Revised Proposal (right to

serve Irish proceedings on third state defendant)

Rule 1(a): the whole subject matter of the action is land situate within the jurisdiction (with or without rents or profits), or the perpetuation of testimony relating to land within the jurisdiction.

The plaintiff would be entitled to issue and serve because the Irish court has exclusive jurisdiction under Article 22.1

Rule 1(b): any act, deed, will, contract, obligation, or liability affecting land or hereditaments situate within the jurisdiction, is sought to be construed, rectified, set aside, or enforced in the action.

The plaintiff would be entitled to issue and serve because the Irish court has exclusive jurisdiction under Article 22.1

39 See for example dicta of Barrington J in Short v BNFL (No 1) [1996] 2 IR 188.

Rule 1(c): any relief is sought against any person domiciled or ordinarily resident within the jurisdiction.

The plaintiff would be entitled to issue and serve where the person is “domiciled” within the jurisdiction because the Irish court has jurisdiction under Article 2.1 and in Irish practice this includes ordinary residence40.

Rule 1(d): the action is for the administration of the personal estate of any deceased person, who, at the time of his death, was domiciled within the jurisdiction, or for the execution (as to property situate within the jurisdiction) of the trusts of any written instrument, of which the person to be served is a trustee, which ought to be executed according to the law of Ireland.

Order 11 would survive in an administration case, because rights in property arising out of wills and succession are outside the scope of Brussels I, under Article 1.2(a); in a trust case, the plaintiff would be entitled to issue and serve if the trust is domiciled in Ireland (because the Irish court has jurisdiction under Article 5.6).

Rule 1(e): the action is one brought to enforce, rescind, dissolve, annul, or otherwise affect a contract, or to recover damages or other relief for or in respect of the breach of a contract (i) made within the jurisdiction; or (ii) made by or through an agent trading or residing within the jurisdiction on behalf of a principal trading or residing out of the jurisdiction; or (iii) by its terms or by implication to be governed by Irish Law, or is one brought in respect of a breach committed within the jurisdiction of a contract wherever made, even though such breach was preceded or accompanied by a breach out of the jurisdiction which rendered impossible the performance of the part of the contract which ought to have been performed within the jurisdiction.

The plaintiff would be entitled to issue and serve if the place of the performance of the obligation in question was Ireland (because the Irish court has jurisdiction under Article 5.1) or if the contract confers jurisdiction on the Irish courts (in accordance with Article 23)

Rule 1(f): the action is founded on a tort committed within the jurisdiction.

The plaintiff would be entitled to issue and serve if the place where the harmful event occurred or may occur was or is Ireland (because the Irish court has jurisdiction under Article 5.3)

Rule 1(g): any injunction is sought as to anything to be done within the jurisdiction, or any nuisance within the jurisdiction is sought to be prevented or removed, whether damages are or are not also

The plaintiff would be entitled to issue and serve for an injunction to restrain a breach of contract if the place of the performance of the

40 Deutsche Bank v Murtagh [1995] 2 IR 122.

sought in respect thereof. obligation in question was Ireland (Article 5.1) or to restrain a nuisance or other tort if the place where the harmful event occurred or may occur was or is Ireland (Article 5.3), or in an application for provisional or protective measures under Article 35 or Article 36.

Rule 1(h): any person out of the jurisdiction is a necessary or proper party to an action properly brought against some other person duly served within the jurisdiction.

The plaintiff would be entitled to issue and serve if the proceedings involve an Irish-domiciled defendant, provided the claims against that defendant and the foreign defendant are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments (because the Irish court has jurisdiction over the foreign defendant under Article 6.1)

Rule 1(i): the proceeding relates to an infant or person of unsound mind domiciled in, or a citizen of Ireland.

Order 11 would survive, as matters of status or legal capacity are outside the scope of Brussels I, under Article 1.2(a).

Rule 1(j): the proceeding is an interpleader proceeding relating to property within the jurisdiction.

The applicant would be entitled to issue and serve (because the Irish court has jurisdiction over claims as regards rights in rem or possession in moveable property, by virtue of the property being situated here, under Article 5.3).

Rule 1(k): the proceeding relates to an arbitration held or to be held within the jurisdiction or to the enforcement of an award or an interim measure made by an arbitral tribunal in an arbitration so held.

Order 11 can be applied because enforcement of arbitral awards and measures is outside the scope of Brussels I.

Rule 1(l): the proceeding relates to the enforcement of an award made by an arbitral tribunal, having its seat outside the jurisdiction or of the pecuniary obligations imposed by such an award.

Order 11 can be applied because enforcement of arbitral awards and measures is outside the scope of Brussels I.

Rule 1(m): the proceeding is by a mortgagee or mortgagor in relation to a mortgage of personal property situate within the jurisdiction and seeks relief of the nature or kind following, that is to say

The applicant would be entitled to issue (because the Irish court has jurisdiction over claims as regards rights in rem or possession in

sale, delivery of possession by the mortgagor, redemption, reconveyance, delivery of possession by the mortgagee; but does not seek (unless and except so far as permissible under rule 1(e)) any personal judgement or order for payment of any moneys due under the mortgage.

moveable property41, by virtue of the property being situated here, under Article 5.3).

Rule 1(n): the proceeding is brought under the provisions relating to carriage by air of the Air-Navigation and Transport Act 1936.

The plaintiff should in principle be entitled to issue and serve because the Revised Proposal does not affect the operation of other conventions relating to jurisdiction in particular matters (Article 82), and these are essentially Warsaw Convention claims, so Order 11 can be applied.

Rule 1(o): the proceeding relates to a ship registered or required to be registered under the Mercantile Marine Act 1955, or any share or interest therein.

To the extent that the proceedings relate to registration of ownership, the plaintiff would be entitled to issue and serve because the Irish court has exclusive jurisdiction under Article 22.3; in other cases, the plaintiff may in principle be entitled to issue and serve where the claims are Convention claims, so Order 11 can be applied.

Rule 1(p): the proceeding relates to the ownership of a trade mark registered or sought to be registered in the Industrial and Commercial Property Registration Office.

The plaintiff would be entitled to issue and serve because the Irish court has exclusive jurisdiction under Article 22.4

Rule 1(q): the proceeding is brought to enforce any foreign judgment.

It seems reasonable to suppose that proposed Article 4(2) cannot be intended to exclude proceedings solely for the purpose of enforcement of a foreign judgment (from a third state); however, this does not seem to be entirely clear.

Rule 1(r): any relief is sought in proceedings commenced in accordance with Order 136, RSC (i.e. in proceeds of crime proceedings)42.

There is no clear basis in the Revised Proposal on which the applicant would be entitled to issue and serve but if the nature of the claim is outside the scope of Brussels I (see below) Order 11 can

41 Concerns have been raised about whether it is appropriate to include intangible moveable assets within the scope of a special jurisdiction based on the principle of location and it has been suggested that Article 5.3 should explicitly be confined to tangible moveable property.

42 Similar issues arise in relation to Order 11, rule 2(h), District Court Rules: “(h) where necessary, in proceedings brought under subsection (3) of section 38 of the Criminal Justice Act, 1994 (and in accordance with rule 6 of Order 38) for an order authorising the further detention of cash seized.”

be applied. It is notable that the Heidelberg Report recognised a lacuna in the area of civil proceedings as an adjunct to criminal proceedings.

Rule 1(s): the proceeding is brought to enforce any interim measure issued by an arbitral tribunal, having its seat outside the jurisdiction or for other relief within the jurisdiction in connection with an arbitration held or to be held outside the jurisdiction.

Order 11 can be applied because enforcement of arbitral awards and measures is outside the scope of Brussels I.

Rule 3. (1) The parties to any contract may agree— (a) that the Court shall have jurisdiction to entertain any proceeding in respect of such contract, and also, or in the alternative; (b) that service of any summons in any such proceeding may be effected at any place within or out of the jurisdiction on any party or on any person on behalf of any party or in any manner specified or indicated in such contract. (2) In any such case, notwithstanding anything contained in these Rules, service of any such summons at the place (if any) or on the party or on the person (if any) or in the manner (if any) specified or indicated in the contract shall be deemed to be good and effective service wherever the parties are resident. If no place, or mode, or person be so specified or indicated, service out of the jurisdiction of such summons may be ordered.

The plaintiff would be entitled to issue and serve to the extent that the contract involved a prorogation of jurisdiction consistent with Article 23, but merely providing for a service agent or agreed mode of service in the absence of an effective choice of Irish jurisdiction might not be sufficient.

Certain heads of Order 11 plainly correspond to, or overlap with, cases in which, under Brussels I, the Irish Courts would have jurisdiction (or would have exclusive jurisdiction). However, the differences in expression may ultimately lead to subtle and perhaps unexpected differences in scope, so it is likely to be unwise to suppose that any post-revision category will “more or less” correspond to an existing limb or Order 11, rule 1 and in any event a “more or less” correspondence will be of cold comfort to a plaintiff who could issue under Order 11 but cannot under the Revised Proposal or to a defendant who could not be issued against under Order 11 but can under the Revised Proposal.

As regards relevant cases in Order 11, rule 1 in which the Court may now permit service

outside the jurisdiction, to which Brussels I as revised would not apply, there should not

be any particular issue if the current cases are not “civil or commercial” or are explicitly

outside the scope of Brussels I, because the Proposed Revision cannot affect subsidiary

rules on matters with which it does not itself deal. Service out of the jurisdiction is

separately regulated, for example, in criminal and family law matters.

Greater doubts obviously arise in relation to the classes of statutory cases identified

particularly in Euroking. Where Article 4.2 of the Revised Proposal provides that a

defendant domiciled in a third State can only be sued in accordance with the Revised

Proposal, this seems implicitly to constrain the basis on which a national parliament

could confer an extraterritorial jurisdiction on its own courts, at least where to do so

would be risk inconsistency with the requirements of the Revised Proposal (or with one

of the related Regulations concerning jurisdiction, such as 2201/2003 in relation to

certain family law matters and 1346/2000 in relation to insolvency matters in cases of

those kinds). The question seems to be whether any such instance would (a) fall within

the subject matter ambit of Brussels I as revised in terms of being fundamentally a “civil

or commercial” matter in a Brussels I sense, which would seem to exclude the prospect

unless (b) the nature of the claim is one in which Brussels I authorises the exercise of

jurisdiction over a foreign-domiciled defendant. There may be no such constraint

where the proper characterisation of the nature of the case is that it is not “civil or

commercial” in a Brussels I sense, for example by being administrative or revenue

related.

The question of characterisation in such cases may be problematic; for example, section

150 proceedings could be described as essentially administrative in a Brussels I sense

(so outside scope entirely), or could be characterised as essentially having as their

object the dissolution of companies, so that the Irish court would have exclusive

jurisdiction in relation to cases involving directors of Irish companies by reason of Article

22.2; on either characterisation, Euroking would not fall foul of the Proposed Revision,

but issues would arise depending on whether there is harmony about which

characterisation is correct in these sorts of cases.

Undoubtedly, some significant comfort can be gleaned from the fact that both McKenna

and Euroking involved defendants/respondents in Brussels I states and no inconsistency

with Brussels I was found to arise in either case. However, the Proposed Revision

creates some uncertainty about the extent to which national parliaments can add to

extraterritorial jurisdiction in civil or commercial matters. This may be more

controversial in England, which has traditionally exercised a greater long-arm jurisdiction

in civil matters than has Ireland43, but nonetheless could have ramifications for cases

here.

43 CPR, rule 6.20(18) and Practice Direction 6B, paragraph 3.1(20) have the effect that leave may be granted where a claim is made – (a) under an enactment which allows proceedings to be brought and those proceedings are not covered by any of the other grounds referred to in paragraph 3.1; or

12 Forum necessitatis

The proposed Articles 25 and 26, which are entirely new, contain the forum necessitatis

proposals:

“Article 25

Where no court of a Member State has jurisdiction in accordance with Articles 2 to24,

jurisdiction shall lie with the courts of the Member State where property belonging to

the defendant is located, provided that

(a) the value of the property is not disproportionate to the value of the claim; and

(b) the dispute has a sufficient connection with the Member State of the court seised.

Article 26

Where no court of a Member State has jurisdiction under this Regulation, the courts of a

Member State may, on an exceptional basis, hear the case if the right to a fair trial or

the right to access to justice so requires, in particular:

(a) if proceedings cannot reasonably be brought or conducted or would be impossible in

a third State with which the dispute is closely connected; or

(b) if a judgment given on the claim in a third State would not be entitled to recognition

and enforcement in the Member State of the court seised under the law of that State

and such recognition and enforcement is necessary to ensure that the rights of the

claimant are satisfied;

and the dispute has a sufficient connection with the Member State of the court seised.”

The forum necessatitis provisions will give significant scope for debate if implemented.

Article 25 contemplates a residual jurisdiction in a Member State where a defendant has

property (at least, property the value of which is proportionate to the value of the claim)

and the dispute has a “sufficient connection” with that Member State. The nature of

Ireland’s economy means that it is host to EU branches and subsidiaries of various

classes of international operations, and hosts a number of service providers who operate

treasury, custodianship and similar financial services operations; the presence of these

kinds of providers, often managing significant values of property of non-EU entities,

suggests that Ireland might become a ripe candidate for forum necessitatis-based claims

against such entities where the home state is not an attractive forum for an intending

(b) under the Directive of the Council of the European Communities dated 15 March 1976 No. 76/308/EEC, where service is to be effected in a Member State of the European Union. Eleven such cases are identified at Dicey, Morris & Collins, “The Conflict of Laws”, 14th Edition Volume 1, paragraph 11R-251.

plaintiff, so the proposed Article 25 might be very positive for Ireland in litigation market

share.

However, if Article 26 is engaged in such a case or generally, it could involve EU courts

in making significant value judgments about the quality of justice which might be

obtained in the courts of third states. How should a Member State’s court decide to

take jurisdiction exceptionally because proceedings “cannot reasonably be brought or

conducted or would be impossible” in the relevant third state? Should we expect the EU

to develop a black list and white list of third states whose quality of justice is sufficient

to meet the requirements of Article 26(a)? The alternative test in Article 26(b) may

raise questions about the sufficiency of the rule of private international law as applicable

currently in Ireland in relation to the enforcement of judgments from third states.

Ireland has never been particularly enthusiastic about bilateral or multilateral

arrangements for mutual recognition and enforcement of judgments (and the position in

this regard might be contrasted with the entitlement to foreign arbitral awards to

recognition and enforcement). However, given that the Irish courts might now be

called upon to assume jurisdiction as of right against third state defendants or called on

exceptionally to do so in accordance with Article 25 or 26 of the Proposed Revision, the

time may well be appropriate to look into whether we should be taking a more benign

approach to the recognition and enforcement of civil and commercial judgments from

respectable third states, by broadening the circumstances in which recognition and

enforcement is permitted by our current rule44.

13 Other issues

The Proposed Revision incorporates a variety of other less controversial suggestions pertaining to more minor issues. There is a proposal to modify the power of a court other than the court having jurisdiction as to the substance of the matter to grant provisional and protective measures available under its own law. At present, the case law is to the effect that the grant of such measures is authorised only where there exists a “real connection” between the substantive subject matter and the territorial jurisdiction of the forum in which such measures are sought45. The Revised Proposal (Article 31) would require the courts concerned to co-operate “in order to ensure proper coordination between the proceedings as to the substance and the provisional relief” and in particular would

44 Which is broadly to the effect that a foreign judgment may be enforced summarily where: - it is for a specific sum of money; - it is final and conclusive (res judicata according to the law of the foreign court which pronounced it); - it was rendered by a court which the Irish rules of conflicts of laws recognise as being competent to

exercise jurisdiction over the defendant, unless - it was obtained by fraud; - its enforcement would be contrary to Irish public policy; - the judgment is to enforce a penal or revenue statue of a foreign state, or

- the foreign proceedings were conducted in a manner contrary to the principals of natural justice. 45 Van Uden Maritime BV v Firma Deco-Line C-391/95 [1998] ECR 1-7091.

require the court seised with an application for provisional, including protective measures to “seek information from the other court on all relevant circumstances of the case, such as the urgency of the measure sought or any refusal of a similar measure by the court seised as to the substance.” Article 2 proposes a new, and extended definition of a “judgment” and this may create some potential for conflict in relation to certain interlocutory matters. A “judgment” for enforcement purposes, includes “provisional, including protective measures”, which in turn includes protective orders aimed at obtaining information and evidence. A question here is whether the court seised of the substance of the dispute could make a “protective” order for the production of evidential material addressed to a witness or non-party in another Member State and authorise one of the parties to invoke it before the local court of the witness or non-party under Brussels or whether the procedure in Regulation 1206/2001 (a request to the local court to assist in producing the evidence) would be followed in every such case. Some clarification may be desirable on the limits of each of the instruments in this context; it might be appropriate that the court seised of the substance could order the production of documents, information, etc by a person in another Member State without intervention of the person’s local court where that person keeps the documents, information, etc on behalf of a party (even if access to the documents, information, etc would not be available in the same way or to the same extent under local pre-trial procedures); though it would seem right at least that documents, information, etc would always be sought from an unconnected non-party in another Member State through the intervention of the non-party’s local court under Regulation 1206/2001. 14 Conclusion As both Ireland and the UK have elected to opt in to the proposed recast Brussels I, both will be bound by the measure ultimately adopted by the European Parliament and the Council, if the measure attracts the necessary qualified majority, as neither can opt back out. Of course, at present, the Proposed Revision is simply that, a proposal. How enthusiastically the Member States (and particularly those whose common law traditions may be somewhat discomfited by elements of the Proposed Revision), support the detail of the present proposal remains to be seen. It will inevitably be some considerable period before the proposed revision becomes the Regulation which replaces Brussels I. As presently formulated, the proposal contains potential difficulties and potential opportunities for those involved in litigation in Ireland and it may well be that if the proposal is advanced in more or less its present form, Ireland will need to look beyond mere narrow “transposition” to broader issues surrounding our wider attitude to recognition and enforcement of judgments given by third state courts. The opt in allows Ireland to exert influence on both the attractive elements and on the most problematic elements of the Proposed Revision, with the possibility of removing, diluting or delaying those which cause most concern.