Litigating in Europe - what the future holds
The key changes that will be introduced by the Recast Regulation are:
1. The effectiveness of jurisdiction clauses in favour of EU courts will be reinforced.
2. EU courts can stay proceedings in favour of a non-EU court, as long as the non-EU court is first seised.
3. If there is a jurisdiction clause in favour of an non-EU court but the EU court is first seised, the position is unclear.
4. The exclusion of arbitration from the Regulation is reinforced, but practical ambiguities remain.
Overall, the Recast Regulation is a positive endeavour to improve the practical application of the Brussels I Regulation, which appears to be achieved by exclusive jurisdiction clauses in contracts giving jurisdiction to courts within the EU. However, where the parties give exclusive jurisdiction to courts outside the EU, there is a real risk that the Recast Regulation will require courts to ignore the parties' wishes.
In order to achieve certainty and transparency, businesses should therefore ensure that their contracts include watertight and beneficial jurisdiction clauses.
The Brussels I Regulation (Recast) comes into force on 10 January 2015 bringing with it the promise of significant improvements to the jurisdictional regime within the EU. Most importantly, it gives priority to a court ‘seised’ (i.e. given the claim) under an exclusive jurisdiction clause and gives it the power to continue proceedings that have otherwise been first issued in the court of another EU member state.