Brussels flexes its muscles in support of forum choice clauses

‘Jurisdiction’ is the power of a court to entertain an action or other proceeding. When parties enter into a transaction they usually include a ‘jurisdiction clause’ alongside a ‘governing law clause’ to determine where and subject to which country’s laws, any future issues should be determined.

Since coming into effect, the 2001 Brussels Regulation has governed the effect and enforcement of jurisdiction clauses within the EU, in addition to dealing with jurisdiction outside of contractual relationships, and the enforcement of judgments. This regulation has now been recast, introducing some significant changes – and while we have known the shape of the new regime for nearly two years, the moment of reckoning is nearly upon us because the new rules come into force on 10 January 2015.


The Brussels Regulation affects all ‘EU parties’. This means people or companies domiciled in the current 28 EU member states. The recast regulation will not, however, apply to Switzerland, Iceland or Norway, which are parties to the 2007 Lugano Convention, which implemented similar provisions to the original Brussels Regulation – but which is not being recast.

The regulation applies to civil and commercial matters but does not extend to revenue, customs or administrative matters or to arbitration. Other excluded areas include wills, succession, matrimonial (or equivalent) property or obligations and matters relating to the liability of states when exercising state authority. It also excludes bankruptcy proceedings at Article 1(2)(b), although it is a moot point whether disputes regarding companies in administration are within its scope.

It is relevant to any business that:

  • enters into agreements with EU parties;
  • undertakes business within the EU; or
  • may wish to enforce an English or EU member state judgment elsewhere in the EU.

The focus of this article is on commercial contracts and it does not address specifically employment, consumer or insurance matters.


The Brussels Regulation is the key 
European instrument on jurisdiction and enforcement matters within the EU. It sought to simplify existing processes and create a more effective and legally certain environment for businesses and individuals. In particular, it:

  • enforced the principle that persons domiciled in the EU should generally be sued in their own member state (old Article 2);
  • provided alternative grounds for jurisdiction, so that defendants could be sued in the courts of the place of performance of a contract or in the place where the harmful events occurred in tort (old Article 5);
  • supported the freedom of the parties to agree that, in the event of a dispute, the courts of a member state may have jurisdiction to hear that dispute where one or more of the parties is domiciled in the EU (old Article 23);
  • provided a mechanism to deal with situations where parties to a dispute commenced legal proceedings in an EU member state in breach of jurisdiction agreements (old Articles 27-30); and
  • provided a regime whereby judgments given within the EU would be easily enforceable in other EU member states (old Articles 38-56).

Although the Brussels Regulation is generally considered to have been successful in achieving its aims, it has 
not been an unmitigated success. The best-known problem is the so-called ‘Italian torpedo’, essentially a tactic whereby proceedings are commenced in a member state court in breach of a jurisdiction agreement in order to prevent the court of choice taking control of the dispute and rendering an enforceable judgment.

A 2010 review of the regulation concluded that there was a need to make changes to improve cross-border co-operation and to clarify the operation of the Brussels Regulation. The result of this process is the new recast Brussels Regulation for proceedings instituted after 10 January 2015 (Regulation (EU) 1215/2012 of the European Parliament and of the Council of 12 December 2012).


Many of the provisions contained in the 2001 regulation will remain in force, although additional clarification has been added by a long list of recitals, which have to be consulted and cross-referenced with the amended articles themselves, and the numbering of the articles has changed. Aspects that have not changed include:

  • the default position that a defendant ought to be sued in the member state of their domicile (Article 4);
  • the alternative grounds to found jurisdiction in contract (Article 7(1)(a)) and tort (Article 7(2)); and
  • additional alternative grounds to found jurisdiction in circumstances where there are multiple defendants (new Article 8(1)) and third-party proceedings (new Article 8(2)).

There are also many changes, with the main ones concerning:

  • strengthened support for jurisdiction agreements within member states where neither party is domiciled in a member state (Article 25 and Recital 24);
  • greater powers for courts to enforce exclusive jurisdiction agreements (Article 31 and Recital 22);
  • the inclusion of a new international lis pendens (related actions) rule (Article 24 and Recital 24);
  • enhanced support for arbitration proceedings (Recital 12); and
  • a simplified process for enforcing awards in members states (Articles 
39-44 and Recital 26).


Article 25 upholds jurisdiction agreements. In a significant practical change, the EU domicile requirement for parties to a jurisdiction agreement has been dropped, so a jurisdiction clause which names a member state falls within the scope of Article 25, even if none of the parties are domiciled in the EU. This is a change to the old rules (old Article 23), which required that one or more of the parties must be domiciled in a member state for the regulation to uphold the jurisdiction clause.

Article 25(1) and a new Recital 20 also set out the law concerning the governing law to be applied to consider the validity of a jurisdiction clause. The question of whether a jurisdiction agreement is null and void as to its ‘substantive validity’ will be determined under the law of the member state identified in the jurisdiction clause.

In addition, Article 25(5) enshrines the principle of ‘separability’ into EU law. It provides that:

‘… an agreement conferring jurisdiction which forms part of a contract shall be treated as an agreement independent of the other terms of the contract.’

This means that even if a claim is made that the contract is invalid, the parties – and member state courts – can be clear as to which court will resolve that dispute.


There is an important change to the lis pendens (related actions) rules (Articles 29-34), which concern the status of an exclusive choice of court – or jurisdiction – agreement and its interrelationship with concepts of mutual trust between EU member states.

Under the Brussels Regulation, where proceedings were commenced in the court of one member state, no other court of another state could take control of those proceedings until the court first seized had determined whether it had jurisdiction to hear the matter, even where proceedings had been commenced in that first court in breach of an exclusive jurisdiction agreement. The result of this was the enabling of the ‘Italian torpedo’, whereby judgment could be delayed by the tactical issue of proceedings in another member state, in breach of clear jurisdiction agreements. This was further compounded by the CJEU’s ruling in Gasser GmbH v MISAT Srl [2003], which said that attempts to injunct a party from pursuing proceedings before a court not specified in the jurisdiction clause – an anti-suit injunction – were incompatible with concepts of mutual trust, as enshrined in the Brussels Regulation.

The recast regulation brings the law into line with the expectations of commercial parties. The court chosen by the parties now has the power to decide on its jurisdiction, rather than one chosen by the party exploiting the ‘first-in-time’ rule to thwart such an agreement. The new Recital 22 is strongly worded, stating its intention to avoid the use of ‘abusive litigation tactics’.

There are some conditions that must be complied with: a party must start proceedings in the court designated in the jurisdiction clause to trigger a stay of the proceedings commenced in breach of that clause (Article 31(2)). Also, the clause must be ‘exclusive’ – a non-exclusive jurisdiction clause will not suffice – and it has to be granted to a member state country.

This also means that member states are not obliged to decline jurisdiction simply because the parties have contractually agreed that the courts of a non-EU state will have jurisdiction. Critics have argued that it is the great missed opportunity of the recast regulation not to extend to cover jurisdiction agreements in favour of non-EU (or ‘third’) state courts.


The recast regulation takes a step in the right direction as Recital 24 and Article 34 give member state courts a discretion to stay proceedings to take into account proceedings pending before the courts of a non-EU state, provided, in particular, that there is an exclusive jurisdiction clause in favour of the third state and where:

  • it is expedient to hear and determine the related actions together to avoid the risk of irreconcilable judgments resulting from separate proceedings;
  • it is expected that the court of the third state will give a judgment capable of recognition and, where applicable, of enforcement in that member state; and
  • the court of the member state is satisfied that a stay is necessary 
for the proper administration of justice.

This measure goes some way to address the concerns arising out of the CJEU’s decision in Owusu v Jackson [2005], which famously declared that a member state seized on the basis of the defendant’s domicile could not decline jurisdiction in favour of a third state, even if the third state was a more appropriate forum.

However, as is the case within Europe, proceedings have to have been initiated in the third state, meaning that tactical litigation can still potentially be started in a member state, which will have no basis to decline jurisdiction if proceedings have not been initiated elsewhere in accordance with the jurisdiction clause.


These clauses are commonly used in finance documents, and provide that, while all parties submit to the jurisdiction of courts in a specified jurisdiction, the lending (and more powerful) party may also sue in any other court of its choice (normally to allow it to pursue assets more easily).

They have presented something of a problem across Europe since a 2012 French Supreme Court decision invalidated them (X v Rothschild [2012]) and their effect has become a matter of some debate. The English courts, however, have traditionally given effect to unilateral jurisdiction clauses and are not bound by the Rothschild decision (with Popplewell J giving a robust defence of such clauses in obiter comments in Mauritius Commercial Bank v Hestia Holdings [2013]). The current position, therefore, appears to be that, while such clauses will be supported in England and Wales, there remains some uncertainty as to their application in other member states, especially if the case has a nexus with France, in which case it may be preferable for contractual parties to receive equal rights, as they do under an exclusive jurisdiction clause.


The West Tankers litigation (Allianz SpA v West Tankers Inc [2009]) concerned the vexed relationship between court and arbitral proceedings. The judgment addressed the question of whether the English court could issue an anti-suit injunction to prevent a party commencing proceedings before the Italian courts. Not only did the CJEU determine that it could not, it also ruled that it was for the Italian court to determine as a preliminary question whether the arbitration clause was valid, and therefore whether the matter was within the scope of the Brussels Regulation (which excluded arbitration from its scope).

The practical consequence of the West Tankers ruling was that it enabled a party to initiate legal proceedings in breach of an arbitration clause in the member state most likely to find that the arbitration clause failed and to then seek to enforce that judgment in other EU states, rendering the courts of the arbitral seat powerless to protect the arbitration.

Under the Brussels Regulation (recast), this practice ought to be a thing of the past. Although the new regulation continues to exclude arbitration from its scope, Recital 12 provides that, while courts may refer parties to arbitration, stay or dismiss proceedings or determine the effect of arbitration agreements, such rulings as to whether agreements are unenforceable are not to be subject to the rules of recognition and enforcement. Furthermore, new Article 73(2) provides that the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards takes precedence over the Brussels Regulation, indicating that a member state court may enforce an arbitration award even if there has been a judgment elsewhere in the EU to the effect that the underlying arbitration agreement was unenforceable.


The procedures by which judgments from one EU member state are given effect within others have been simplified by Articles 36-51. Most significantly, the process of exequatur – the conversion of a foreign judgment into a domestic one for enforcement purposes – has been removed. Now, a party need simply present a copy of the judgment and a standard form certificate to commence enforcement (new Article 36).

Furthermore, in the event that a judgment contains relief that lacks an equivalent in the enforcing member state, that state’s court can adapt the relief into a form it recognises.


The recast Brussels Regulation is undoubtedly to be welcomed as a good thing. It has been the subject of extensive consultation and seeks to put right many of the shortcomings of the original regulation and speed up access to justice. In particular it:

  • generally increases the level of certainty as to the effect of jurisdiction clauses;
  • significantly improves the regime enforcing exclusive jurisdiction clauses – both within the EU and where proceedings have been commenced outside of the EU;
  • offers enhanced support for 
arbitration; and
  • provides a more streamlined regime 
for enforcing judgments.

That is not to say that it is without its detractors. Particularly, it has been subject to criticism from many quarters that it does not go far enough, and particularly that it has missed a real opportunity to deal more effectively with the situation where ‘third state’ proceedings are ongoing. Similarly, it is not entirely clear how the Brussels Regulation and the New York Convention will interact or how asymmetric or hybrid jurisdiction clauses will operate. No doubt many of these questions will be resolved through judgments over the coming years.

By Richard Twomey, partner, and 
Damian Crosse, partner, Pinsent Masons.