The Review of the Brussels Regulation and the efficacy of jurisdiction and arbitration clauses

The Brussels Regulation (Council Regulation (EC) No 44/2001) sets out detailed rules on the jurisdiction of courts and the enforcement and recognition of judgments within the EU, including rules relating to jurisdiction agreements and the interface of the Regulation with arbitration.

One problem that has arisen under the Regulation is that its rules do not stop a party from bringing proceedings in breach of an (exclusive) jurisdiction or arbitration clause and they compel the chosen court to stay any subsequent proceedings brought before it (the "first-seised" rule). This problem has been exacerbated by the ECJ decision in West Tankers (see post) and the Court of Appeal's decision in National Navigation v Endesa (see post) respectively. West Tankers closed the door on anti-suit injunctions aimed at proceedings brought before a European court in breach of an arbitration agreement and National Navigation v Endesa ruled that judgments dealing with the validity and scope of an arbitration agreement as an incidental issue had to be recognised by the court at the seat of the arbitration. These rules and decisions have been widely criticised as undermining the efficacy of jurisdiction and arbitration agreements.

The Commission is proposing to address the problem as part of its review of the Regulation and the European Parliament's Committee on Legal Affairs has recently published its preliminary views in a Draft Report dated 27 April 2010 and supplemental Amendments dated 12 May 2010. Both the Commission and the Committee are suggesting changing the "first-seised" rule and giving the court named in a jurisdiction clause priority to determine its jurisdiction and compelling any other court to stay proceedings regardless of whether these are brought first or subsequently. Perhaps even more surprisingly, the Committee has voiced a very strong preference for a reversal of West Tankers and the continued availability of anti-suit injunctions to enforce arbitration agreements. Herbert Smith has been involved in the consultation process both directly and through committees and has advocated an enhanced recognition of jurisdiction and arbitration agreements. The Commission's final proposal is not expected until 2011.