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CHOICE-OF-COURT AGREEMENTS, THE ITALIAN TORPEDO, AND THE RECAST OF THE BRUSSELS I REGULATION

Published online by Cambridge University Press:  29 January 2015

David Kenny  and
Rosemary Hennigan
David Kenny
Affiliation:
Lecturer in Law, Trinity College Dublin, david.kenny@tcd.ie; Trainee Solicitor, McCann FitzGerald, rosemary.hennigan@mccannfitzgerald.ie.
Rosemary Hennigan
Affiliation:
Lecturer in Law, Trinity College Dublin, david.kenny@tcd.ie; Trainee Solicitor, McCann FitzGerald, rosemary.hennigan@mccannfitzgerald.ie.
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Abstract

The Recast of the Brussels I Regulation (1215/2012/EC) reforms EU law on jurisdiction in civil and commercial matters and includes long-awaited changes designed to prevent the use of the abusive tactic known as the Italian Torpedo to frustrate choice-of-court agreements. The new rules give priority in determining jurisdiction to a court designated by a prima facie valid agreement, even if litigation underway elsewhere was first in time. While this development has been broadly welcomed, it is unclear if the Recast's solution applies to related actions underway in other states as well as identical actions. Using a recent case from the Irish Supreme Court, in this article, we highlight that this possible omission could create significant problems, and calls into question the comprehensiveness of the Recast's solution to the problem of the Italian Torpedo.

Keywords

Brussels Regulationchoice-of-court agreementsexclusive jurisdiction agreementsGasser v MISATItalian Torpedojurisdictionlis pendensRecast of Brussels Regulationrelated actionsWebsense v ITWAY
Type
Shorter Articles
Information
International & Comparative Law Quarterly , Volume 64 , Issue 1 , January 2015 , pp. 197 - 209
Copyright
Copyright © British Institute of International and Comparative Law 2015 

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References

1 Council Regulation (EC) 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters.

2 Council Regulation (EC) 1215/2012 of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast); hereinafter, Recast.

3 [2014] IESC 5.

4 Brussels Convention on jurisdiction and the enforcement of judgments in civil and commercial matters (1968).

5 Denmark initially opted out of the 2001 Regulation, but later opted in. However, Denmark has not, as of yet, opted in to Recast.

6 See Clarkson, CMV and Hill, J, The Conflict of Laws (4th edn, Oxford, 2011) 189Google Scholar.

7 The probable incompatibility of the common law doctrine of lis pendens is an example of this; even when litigation is already underway in a more appropriate forum outside of the EU, Member State courts must accept jurisdiction to hear identical cases that could produce conflicting judgments if the Regulation demands that jurisdiction be taken. Goshawk Dedicated v Life Receivables Ireland [2008] IEHC 90; Catalyst Investment Group v Lewisohn [2010] Ch 218. See generally, Kenny, D, ‘Goshawk Dedicated v Life Receivables Ireland: Jurisdiction, Lis Alibi Pendens, and the Problematic Use of the Brussels Regime’ (2009) 12 TCLR 1Google Scholar. The Recast includes proposal to address this issue; (n 2), art 33 and 34.

8 Franzosi, M, ‘Worldwide Patent Litigation and the Italian Torpedo’ (1997) 7 EIPR 382Google Scholar.

9 (n 1) art 27.

10 (n 1) art 28.

11 Hartley gives the example of Trasporti Castelletti v Hugo Trumpy (C-159/97) [1999] ECR I-1597, where the determination had taken eight years. ‘Choice-of-Court Agreements and the New Brussels I Regulation’ (2013) 129 LQR 309, 310.

12 It provides that parties may not choose to forego the jurisdiction insisted upon in the Regulation for Insurance, Employment, or Consumer contracts; (n 1) art 23(5).

13 Case C-116/02 [2003] ECR I-14693.

14 Ibid [48]–[49], citing Case C-351/89 Overeas Union Insurance v New Hampshire Insurance [1991] ECR 1-3317.

15 ibid [69].

16 The problem of delay litigation was added to by the incompatibility of anti-suit injunctions with the Brussels regime. In Turner v Grovit, Case C-159/02 the ECJ held that a national court cannot issue an injunction preventing a party from initiating proceedings in another contracting state, even where those proceedings might be filed in bad faith. Such an injunction was inconsistent with the spirit of the Convention; one should trust that the courts of other states will dismiss the action if it is improperly brought. A consequence of this is that parties cannot be injuncted from undertaking Torpedo litigation.

17 Hartley (n 11) 310. cf Lord Mance, ‘Exclusive Jurisdiction Agreements and. European Ideals’ (2004) 120 LQR 357.

18 (n 2); Also referred to as Brussels I bis.

19 See Green Paper on the Review of Council Regulation (EC) No 44/2001 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters COM (2009) 175 final; Proposal for a Regulation of the European Parliament and of the Council on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Recast) COM (2010) 748 final, hereinafter ‘Recast Proposal’.

20 The most significant of these was the idea that the regime could be universal, and apply to non-member states; ibid. This would have had the effect of eliminating the jurisdictional rules of Member States almost entirely. However, this was not adopted in the final proposal.

21 This was previously numbered art 23 in the 2001 Regulation, (n 1).

22 Under the Recast, as under the 2001 Regulation, choice-of-court agreements must choose a Member State in order to have priority over the other rules in the Brussels regime. Parties may not choose the courts of a non-Member State. The abolition of this requirement was considered, but was ultimately not adopted. This has been subject to some criticism; see S Garvey, ‘Reform of the Brussels Regulation: are we nearly there yet?’ Allen & Overy, 26 April 2013, available at <http://www.allenovery.com/publications/en-gb/Pages/Reform-of-the-Brussels-Regulation-are-we-nearly-there-yet.aspx>. However, the new provision for deferring to the jurisdiction of third states (see above at (n 7) might go some way towards respecting these agreements in practice in allowing courts to stay parallel proceedings brought in a Member State.

23 These are clauses where the parties are given unequal positions in respect of jurisdiction; say, one party must sue in particular place, whilst the other may choose one of several jurisdictions. The French Supreme Court has invalidated such a clause, (X v Rothschild (French Supreme Court, First Civil Chamber, 26 September 2012, No 11-26.022) whereas others regard them as unexceptionable. The view of the ECJ on this matter is unclear, and it is perhaps unfortunate that the Recast did not clarify the status of these clauses in European law.

24 (n 2) Recital 22.

25 Ibid art 31(2).

26 This is the reference to art 26 in the text of art 31(2)—that article allows parties to acquiesce to jurisdiction by entering an unconditional appearance. Therefore, if both parties are amenable, the litigation can take place elsewhere.

27 (n 2) Recital 22.

28 See Garvey (n 22); Hartley (n 11); Ratković, T and Zgrabljić Rotar, D, ‘Choice-of-Court Agreements under The Brussels I Regulation (Recast)’ (2013) 9(2) JPrivIntL 245, 261–3Google Scholar.

29 See Hartley (n 11); Ojiegbe, C, ‘Choice of Court Agreements and the End of Torpedo Actions’ (2014) 17 TCLR 126Google Scholar; Garvey, (n 22).

30 [2014] IESC 5 [24], hereinafter ‘Websense’.

31 According to the Court, there was ‘no question’ that the proceedings would had to be stayed under art 27; ibid [22]. They could not be said to be the same proceedings brought by the same parties.

32 Ibid [20].

33 (n 1) art 28.

34 Websense (n 30) [32], quoting the ECJ in Case C-406/92 The Tatry v Maciej Rataj [1994] ECR I-5439 [52].

35 Sarrio SA v Kuwait Investment Authority [1997] 1 Lloyd's Rep 113 (CoA); Sarrio SA v Kuwait Investment Authority [1999] 1 AC 32 (HL).

36 Websense (n 30) [38]; cf [27].

37 Ibid [38].

38 ibid.

39 ibid [43].

40 ibid. This standard is high indeed, given the likely evidential difficulties litigants would face in attempting to prove bad faith.

41 ibid [44]–[45]; citing JP Morgan Europe Limited v Primacom AG and Another [2005] EWHC 508.

42 ibid [46], quoting Gasser v MISAT (n 13) [68].

43 ibid [52].

44 ibid. Though it is unclear which other Irish cases were being referred to, it is likely that it refers to Goshawk (n 7). Clark J, who gave judgment in the High Court in Goshawk, was a member of the three-judge Supreme Court in Websense.

45 Recast (n 2) Recital 22.

46 Hartley (n 11) 312.

47 The explanatory memorandum accompanying the original proposal provides no guidance as to the intention of the drafters. It does not mention related actions in respect of these provisions, giving no sense of whether they were thought to be included or excluded. Recast Proposal (n 19) [3.1.3].

48 The Irish Court suggested that it might be possible to consider the use of delay tactics if there were evidence of bad faith or abuse of process, but such evidence may not be easy to produce. Websense (n 30) [43].

49 Hartley (n 11) 312.

50 JP Morgan Europe Limited v Primacom AG and Another [2005] EWHC 508.

51 Websense (n 30) [32]; [44]–[49]. The English High Court had held there was ‘no possibility of inconsistent or irreconcilable judgments’. JP Morgan (n 50) [62].

52 Recast (n 2) art 31(2). Art 31(3) provides that the courts should dismiss the action if the forum designated by agreement decides it does have jurisdiction.