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ARTICLE 23 OF THE BRUSSELS I REGULATION: A COMPREHENSIVE CODE FOR JURISDICTION AGREEMENTS?

Published online by Cambridge University Press:  14 July 2009

Louise Merrett
Louise Merrett
Affiliation:
Trinity College, Cambridge and Fountain Court Chambers. [email protected]
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Abstract

Article 23 of the Brussels I Regulation gives effect to exclusive jurisdiction agreements and also sets out certain requirements which must be satisfied in relation to such agreements. The precise role of these formality requirements, however, remains controversial. In particular, the extent to which Article 23 itself sets out an exclusive and comprehensive code is unclear. The purpose of this article is to argue that the requirements of Article 23 are both necessary and sufficient conditions for the material validity of jurisdiction agreements in Brussels I Regulation cases.

Type
Article
Information
International & Comparative Law Quarterly , Volume 58 , Issue 3 , July 2009 , pp. 545 - 564
Copyright
Copyright © 2009 British Institute of International and Comparative Law

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References

1 The only exception to the exclusivity of the jurisdiction of the chosen court is Article 22.

2 J Hill International Commercial Disputes in English Courts (3rd edn, Hart, 2005) [5.3.37]. The Schlosser Report (prepared by the Committee of experts convened to work on a draft of what became the 1978 Accession Convention whereby the UK, Denmark and Ireland agreed to become parties to the Brussels Convention) [1979] OJ C59/71, noted that ‘this is not the place to pass comment on whether questions of consensus other than the matter of form should be decided according to the national laws applicable or to unified EEC principles’ [179]. The question ‘how far does the Judgments Regulation allow a reference to a national law in order to determine consent between the parties’ was also raised in the recent expert report on the working of the Brussels I Regulation (Hess, Pfeiffer & Schlosser, Report on the Application of Regulation Brussels I in the Member States, Study JLS/C5/2005/03, September 2007 [375]: the conclusions reached in the report as to that question will be discussed further below.

3 Case 150/80 Elefanten Schuh v Pierre Jacqmain [1981] ECR 1671 [26].

4 A Briggs, L Collins, J Harris, CGJ Morse, J Hill, D McClean and C McLachlan Dicey Morris & Collins on The Conflict of Laws (14th edn, Sweet & Maxwell, London, 2006) [12-108].

5 Case 214/89 Powell Duffryn Plc v Petereit [1992] ECR I-1745.

6 Not the contract as whole, since the jurisdiction agreement is to be considered as a separate agreement.

7 Rome Convention Article 8(1) ‘the existence and validity of a contract, or of any term of a contract, shall be determined by the law which would govern it under this Convention if the contract or term were valid’ (now Article 10[1] of the Rome I Regulation). Although the Rome Convention does not apply to agreements on the choice of court (Article 1[d] and Rome I Regulation Article 1[2][e]) this rule reflects what would be the position at common law (Briggs et al (n 4) [12-090] and [12-097]).

8 Rome Convention Article 10(1)(a) (now Rome I Regulation Article 12[1][a]) provides that the applicable law shall govern interpretation, again this is also the case at common law (Briggs et al (n 4) [12-090]).

9 Rome Convention Article 9 (Rome I Regulation Article 11) and at common law (Briggs et al [n 4][32–177] and [32–178]).

10 Since the question of whether the court has jurisdiction arises on an interlocutory basis before trial, in England it has been held that any fact or matter on which the assumption of jurisdiction depends must be tested according to a ‘good arguable case’. See Canada Trust v Stolzenburg (No 2) [1998] 1 WLR 547, approved in connection with Article 23 by the Privy Council in Bols Distilleries v Superior Yacht Services [2006] UKPC 45, [2007] 1 WLR 12 and applied by the Court of Appeal in Deutsche Bank v Asia Pacific Broadband Wireless [2008] EWCA 1091 [16] and [17].

11 Although the idea developed in the context of arbitration agreements (and is now reflected in s 7 Arbitration Act 1997) the courts have held that the principle should now be applied in the same manner to jurisdiction clauses: see Briggs et al (n 4) [12-099], cited with approval by Longmore LJ in Fiona Trust & Holding Corporation v Privalov [2007] EWCA Civ 20, [2007] 1 All ER (Comm) 891 [27]. This was a case which itself concerned a dual arbitration/jurisdiction clause (per Lord Hoffmann at [2007] UKHL 40, [2007] 4 All ER (Comm) 891 [4]).

12 [2007] EWCA Civ 414 (HL), [2007] 4 All ER 95 [17].

13 [2007] 4 All ER 95 [18].

14 If national law is to have a role, an additional question arises as to which national law to apply. The three main possibilities are: (a) the law of the forum; (b) the law of the chosen forum; or (c) the applicable law. If the latter, further complications arise. The law applied would be that applicable to the jurisdiction agreement itself not the underlying contract. That law would be have to be determined by applying national private international law rules, not the Rome Convention (or now Rome I Regulation) because agreements on choice of forum are excluded from the scope of those rules (Article 1[2][d]).

15 A Briggs, Agreements on Jurisdiction and Choice of Law (OUP, Oxford, 2008) [7.12]. ‘The law set out in the Article renders the requirements of agreement and formality separate and distinct …it is not enough, or so it seems, that the requirements of formality appear to be satisfied if there was no agreement ([7.10]). See further [7.25] where the satisfaction of the formality requirements is described as a ‘necessary, but not a sufficient, component of prorogation of jurisdiction’.

16 Briggs et al (n 4) [12-108].

17 A Briggs and P Rees, Civil Jurisdiction and Judgments (4th edn, LLP, London, 2005) [2.105].

18 The two English cases cited in Hill (n 2) [5.3.39] in support of the alternative view ie that the national governing law applies provide little assistance. Both concerned incorporation of terms (an issue which has been considered on a number of occasions by the ECJ as will be considered further below). In the first, AIG Europe (UK) v The Ethniki [2000] 2 All ER 566, although both the Court of Appeal and the judge below considered the question to be one of construction, governed by the proper law (English law), the Court of Appeal noted ‘It would perhaps be more correct to interpret and apply article 17 in accordance with Community law, but the result would be the same’ ([41]). Similarly, in LAFI Office and International Business SL v Meriden Animal Health Ltd [2001] ILPr 237, it was not suggested that the judge should apply anything other than English law and again the result was the same according to the European cases cited.

19 The majority of the cases in fact deal with Article 17 of the Brussels Convention which was the predecessor of Article 23. The nature of the formality requirements themselves have developed and been subject to a number of changes, but the basic approach for the purposes of the points under discussion here is the same.

20 Article 17 of the Brussels Convention became Article 23 of the Brussels I Regulation.

21 Case 25/76 Galeries Segoura SPRL v Firma Rahim Bonakdarian [1976] ECR 1851; Case 24/76 Estasis Salotti v RUWA [1976] ECR 1831 [7] cited with approval by the ECJ in Case C-106/95 MSG v Les Gravieres [1977] ECR 911 [15] and Case C-387/98 Coreck Maritime GmbH v Handelsveem [2000] ECR 9337 [13].

22 Case 24/76 Estasis Salotti v RUWA [1976] ECR 1831.

23 [1997] CLC 168 CA.

24 [1997] CLC 168 171–172.

25 [2007] EWCA Civ 140, [2007] 1 WLR 2175 [32].

26 See also the Court of Appeal in Deutsche Bank v Asia Pacific Broadband Wireless [2008] EWCA 1091 [30] referring to Salotti as being ‘authority for the proposition that if the formal requirements are established (eg that the clause is in writing) that will be enough to ensure that consensus is established for the purpose of enabling the case to be determined.

27 Case C-288/92 Custom Made Commercial Limited v Stawa Metallbau [1994] ECR 2913. The ECJ itself did not need to consider the point because of its findings on Article 5(1).

28 A further amended form was agreed as part of the Lugano Convention in 1988 and this altered form found its way into the version of the Brussels Convention amended on the accession of Spain and Portugal in 1989. This introduced agreements ‘in a form which accords with practices which the parties have established between themselves’ which is now found in Article 23(b) of the Brussels I Regulation.

29 The early cases talk in terms of a presumption that consensus exists, but the current version of the article may even dispense with the presumption that parties are bound (Briggs and Rees [n 17] [2.95]).

30 Case C-106/95 MSG v Les Gravières [1997] ECR 911 [18–19].

31 Case C-159/97 Transporti Castelletti Spedizioni Internazionali SpA v Hugo Trumpy SpA [1999] ECR 1597.

32 Hess, Pfeiffer & Schlosser Report, 2007 376. The National Report submitted by England and Wales as part of the review was even more categorical stating: ‘It should be immediately noted that, technically, it is neither the lex causea nor the lex fori that should determine the substantive validity of a choice of forum agreement; Article 23 is viewed by the ECJ as a complete set of rules for establishing validity, and no reference to any national law is needed’ ([2.2.25.2]). However, it is noted in the Report itself that Member States' practice, as shown by other national reports, revealed widespread reference to national law (at [376]). One example is Re a Shop Fitting Contract [1993] ILPr 395, where the Court of Appeal, Saarbrűcken, applied national German law to a question of incorporation (this case is referred to in Hill [n 2] [5.3.39]).

33 Case C-169/95 Benincasa v Dentalkit Srl [1997] ECR I-3767 [26]–[27].

34 ‘A jurisdiction clause, which serves a procedural purpose, is governed by the provisions of the Convention, whose aim is to establish uniform rules of international jurisdiction’ Benincasa [25].

35 ‘In a cruel world there are far greater hardships than having to litigate a commercial matter in a Member State other than one which a party would have preferred’ Briggs (n 15) [7.19].

36 [1980] OJ C 282 1–50, comments on Article 1(2)(d).

37 ‘It is in keeping with the spirit of certainty, which constitutes one of the aims of the Convention, that the national court seised should be able readily to decide whether it has jurisdiction on the basis of the rules of the Convention, without having to consider the substance of the case’ Case C-159/97 Trasporti Castelletti v Hugo Trumpy [1999] ECR I-1597 [48] and the cases cited therein.

38 ‘It is important that, in order to achieve as far as possible the equality and uniformity of the rights arising out of the Convention for the Contracting States and the persons concerned, the concept should not be interpreted simply as referring to the national law of one or other of the States concerned’ Powell Duffryn v Wolfgang Peterit [1992] ECR 1745 [13].

39 Estasis Salotti URUWA [1976] ECR 1831 itself where the courts at first instance had applied national law, an approach rejected by the ECJ. See also Transporti Castelletti Spedizioni Internationali SpA v Hugo Trumpy SpA [1999] ECR 1597, ‘any further review of the validity of the clause and of the intention of the party which inserted it must be excluded and substantive rules of liability applicable in the chosen court must not affect the validity of the jurisdiction agreement.’

40 Provimi Ltd v Roche Products Ltd [2003] EWHC 961 (Comm) [2003] 2 All ER (Comm) 683.

41 See, for example, the English national report submitted as part of the Hess review of the Brussels I Regulation which states: On the assumption, however, that some law must be used in order to assess, for example, whether there has been duress, or fraud, or mistake, three possibilities would seem to exist: 1) the national conflicts rules of the court seised; 2) the national conflicts rules of the court chosen; 3) an autonomous European definition of ‘agreement’. In IP Metal v Route OZ SpA [1994] 2 Lloyd's Rep 560, the court held that consensus as to the validity of the jurisdiction clause ‘in the light of community law’ was required. This would seem to be the best evidence in favour of the third possibility, and that is the one most favoured by academics too ([2.2.25.2]).

42 See Briggs and Rees (n 17) [2.105] ‘a requirement of writing provides no guarantee that there was no duress, no fraud, no mistake; it is disreputable to suggest the contrary and frankly embarrassing to keep having to hear its repetition’; see also A Briggs (n 15) [7.12] and Briggs et al (n 2) [12-108].

43 See Hill (n 2) [5.3] where he states that the major problem with the autonomous meaning approach is practical rather than theoretical. Until appropriate European principles have been established by the ECJ a national court has little guidance as to what the European standard should be. It is possible that in the long run, the planned Common Frame of Reference for European Contract Law if accepted could be used for the purposes of Article 23 (see the Hess, Pfeiffer & Schlosser, Report on the Application of Regulation Brussels I in the Member States, at [387]), but no such principles currently exist.

44 Tamplin v James (1880) 15 Ch D 215.

45 Hartog v Colin & Sheilds [1939] 3 All ER 566.

46 See Cundy v Lindsay (1878) 3 App Cas 459 cf Lewis v Avery [1972] 1 QB 198 (HL). The approach in Cundy v Lindsay was confirmed by a narrow three to two majority by the House of Lords in Shogun Finance v Hudson[2003] 62 (HL) [2004] 1 AC 919.

47 In Carnoustie Universal SA v International Transport [2002] 2 All ER (Comm) 657 it was alleged that a jurisdiction agreement was unenforceable because of economic duress (in the form of industrial action). Because the judge (Richard Siberry QC) held that the alleged jurisdiction agreement did not apply he did not need to deal with the question of duress but he commented as follows: ‘If the above conclusions are incorrect, and the Settlement Agreement, whether read together with or separately from the Collective Bargaining Agreement, contains a jurisdiction clause which on its true construction applies to the dispute the subject of the claimants’ claims, interesting questions would arise as to whether a jurisdiction ‘agreement’ procured by duress falls within the scope of Art 17, if not, what system of law governs the issue of whether there has been duress which vitiates the jurisdiction ‘agreement’, and whether the claimants have made out a good arguable case (by reference to whatever is the applicable system of law) that their agreement to the jurisdiction clause(s) in question was indeed procured by duress. Although it would in my view be surprising if a jurisdiction clause to which one party's ‘agreement’ was procured by duress could be said to be the subject of consensus between the parties, as apparently required for the purposes of Art 17, neither this question, nor the issue (if relevant) as to the applicable system of law, has been dealt with in the authorities ([107]).

48 ‘For some Western European legal systems the principle of good faith has proved central to the development of their law of contracts, while in others it has been marginalized or even rejected.’ Introduction to R Zimmerman and S Whittaker, Good Faith in European Contract Law (Cambridge University Press, Cambridge, 2000).

49 ibid (n 48) 47.

50 For example, in German law, the doctrine of the collapse of the underlying basis of the transaction (frustration in English law) has been developed under cover of the general good faith requirement in § 242 BGB (see Zimmermann and Whittaker (n 48) 557).

51 Case 221/84 Berghoefer GmbH & Co v ASA SA [1985] ECR 2699. Good faith was also referred to by the ECJ in Case C-71/83 Partenreederei M/S Tilly Russ v Haven & Vervoerbedrijf Nova [1984] ECR 2417 and Case C-25/76 Galeries Segoura v Firma Rahim Bonakdarian [1976] ECR 1851.

52 Briggs and Rees (n 17) [2.105].

53 Principles of European Contract Law Part 1 Article 1.106 (see Zimmerman and Whittaker (n 48) 14).

54 Case C-269/95 Benincasa v Dentalkit [1997] ECR I-3767.

55 See Deutsche Bank v Asia Pacific Broadband Wireless [2008] EWCA 1091 [24].

56 [2008] EWCA 1091.

57 The agreement was accompanied by a board minute with the personal seal of the chairman and the corporate seal of the defendant company confirming that the chairman was authorised to enter into the agreement.

58 [2008] EWHC 918 (Comm), [2008] 2 Lloyd's Rep 177.

59 ibid [30].

60 ibid [34].

61 Although on the facts the defendants had submitted to this claim.

62 [2008] EWCA 1091 [24].

63 ibid [27]. The Court of Appeal held that the case clearly fell into the second of Lord Hoffmann's categories and that as a matter of English law would no doubt be covered by the principle of severability.

64 ibid [25–26.]

65 Although there were indications that this might well have been enough in any event, see for example para 23.

66 ibid 25.

67 ibid 31.

68 For example in Case C-214/89 Powell Duffryn Plc v Wolfgang Petereit, [1992] ELR 1745 shareholders were held to have agreed to the provisions in the company's articles whether or not this was a contract in national law.

69 See Case C 313/85 Iveco Fiat SpA v Van Hool [1986] ECR 3337. A written contract containing a jurisdiction agreement had expired and contrary to the terms of the agreement had not been renewed in writing. But as the parties continued to deal on the basis that it governed their relationship and had therefore consented to the jurisdiction agreement.