Debate over what is known as ‘Brussels I regulation’ has ground on for some time, so the key principles around cross-border litigation should not come as a surprise. However, developments announced at the end of last month represent a significant step towards the introduction of recast legislation, to be put to the next EU Council meeting, which is likely to be next month.
Like its predecessor, the Brussels Convention, Brussels I was originally introduced as part of a drive to harmonise EU member states’ approach to cross-border litigation. The aim was to provide more certainty and to increase judicial co-operation between states, and thereby advance the single market and free movement of individuals, and ultimately encourage trade.
To meet these objectives, universal EU rules were introduced to:

• determine when the court of a member state has jurisdiction to hear disputes with a cross-border element;
• eliminate or reduce, via a ‘court first seised’ mechanism, the risk of parallel proceedings within the EU, and thus the risk of conflicting judgments too; and
• facilitate the recognition and enforcement of the judgments of state courts throughout the EU.

Although the rules have been effective to a degree, various uncertainties, cracks and problems have emerged, as have ideas for dealing with them. The current proposed amendments represent the latest refinements.
The proposed changes to the rules on jurisdiction and parallel proceedings will generally be welcomed, particularly by international businesses. For example, they provide an overdue boost to the effectiveness of choice-of-court agreements by preventing abusive spoiling tactics, such as the infamous ‘Italian torpedo’ (the commencement of proceedings in one EU state, in breach of a jurisdiction clause in favour of another, in an attempt to frustrate progress of a claim).
They also provide for the courts of member states to ascertain from each other the date on which each was ‘seised’ of its proceedings. Furthermore, they seek to address one of the problems left by the European Court of Justice’s judgment in Owusu v Jackson by permitting the court of a member state to stay proceedings over which it has jurisdiction under the EU rules, when an identical or related dispute is already being heard in a court outside the EU.

Domestic discretion

In addition, the apparent decision to shelve an earlier proposal to extend the jurisdiction rules to cover non-EU domiciled defendants in all circumstances is eminently sensible. As a result, domestic judges will sometimes retain any discretion they have under national law to stay proceedings in favour of a more appropriate non-EU forum.
Under Brussels I currently, a judgment given in one member state cannot automatically be enforced in another. Instead, the courts of the enforcing state must first validate the decision and declare it enforceable (which is known as the ‘exequatur’ process).
The amendments propose the abolition of exequatur. This might be characterised as the mere removal of red tape since the process was relatively mechanical. Furthermore, it has long been possible to obtain orders -- albeit only in limited circumstances -- which can be enforced directly throughout the EU.
Nevertheless, this is an important step commercially and politically –especially in the current climate. Indeed, it will be a welcome development for creditors seeking to enforce judgments against assets located elsewhere in the EU. A simpler, more automatic process would save on time and cost, and have other practical and commercial advantages, particularly at a time when exequatur might otherwise delay or obfuscate the enforcement process.

Alarm bells

However, the changes might raise alarm bells for entities with assets located in one member state that could unexpectedly be sued elsewhere in the EU – and perhaps in a state with a markedly different (and perhaps less advanced) judicial process. Such entities may perceive that the abolition of exequatur, when coupled with the existing rules on recognition and enforcement, will leave their assets yet more exposed.
Importantly, this applies equally to entities based in non-EU states, so it could have the potential to discourage trade from outside the union – in direct contradiction to one of the original goals. That said, protections for judgment debtors are included in the proposals -- and, crucially, they also retain the ability to object to recognition/enforcement, albeit on limited grounds.
On a political level, the abolition of exequatur certainly chimes with general EU ideals. No doubt EU-sceptics will be concerned that this comes with an increased reliance on the courts of other member states to get things right, and that control over domestically-located entities and assets will be further eroded as a result.
Even if unjustified, such concerns may be heightened at a time of economic and financial uncertainty, not least over the future of the euro. But EU supporters might retort that in such torrid times an increased level of trust and co-operation between member states is precisely what is needed.