Introduction: This paper endeavors to compare the traditional English law and the European Community (EC) law on jurisdictional values. It seeks to understand and elucidate why the former set of jurisdictional rules value flexibility and justice while the latter values certainty and predictability vis-à-vis the other. It shall analyze their historical or political background, their objectives, and the basis for assuming jurisdiction. It shall highlight differences between these jurisdictional regimes with authorities’ assistance, like significant Court cases and books that have also helped its evolution besides explaining or simplifying the law.
Definition: The word ‘Jurisdiction’ can have several meanings, but if understood in context with the Court of law, it generally means the ability or authority of a particular Court to determine the issues before it on which a decision is sought. The rules on Jurisdiction play a pivotal role in determining the Court’s ability to address the issues in a given matter.
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Jurisdictional issues become complex on the involvement of more than one Court having jurisdiction. This is certainly an area of concern for the international trade or business (who may be put in an invidious position where they are unaware of the extent of their liability) and the sovereign states that seek to trade with each other without having to spoil their amicable relationship.
The English Law: The English Legal system (having the common law at its core) has had and continues to have a formidable place in expounding the law on several issues, mostly due to intellectuals, and experts’ availability helped it in doing so.
Traditional English law (the common law) is basically the case laws that have become an authority over the period of time about the matter determined therein. Before entering the European Union (EU) by signing the accession document in 1978, in the U.K, along with the judge-made laws, even legislations played a significant role. However, it may have been more or less remedial in nature. However, it seems logical to allow the judge to test the legislation whenever it is so required by the change in circumstances that can be given effect to relative ease compared with the legislation process.
Before the advent of the Brussels/Lugano system and the Modified Regulation, the traditional rules were applied in all cases. Their historical roots make it appropriate to refer to them as the traditional English law/rules.
Different regimes determine the jurisdiction of English courts:
1. The Brussels I Regulation (hereinafter the ‘Regulation’) (an amended version of the Brussels Convention but notwithstanding the amendments, it applies a similar system of rules on the jurisdiction);
2. The Modified Regulation, which allocates jurisdiction within the U.K under certain circumstances; and
3. The traditional English rules.
There are other sets of rules on jurisdiction like the EC/Denmark Agreement on jurisdiction and those in the Lugano Convention. Still, their ambit is restricted in application to the cases where the defendant is domiciled in Denmark in a former and an EFTA member state in case of the latter. There is also the Brussels Convention which applies to Denmark alone.
The EC law: In contrast to the traditional English law, the European Community seems to place more importance on the legislative work than the judge-made laws. Apparently, it is more important for the EC that their legal system’s basic edifice should be based on a codified structure that it defends on the grounds of ease of understanding, amongst other reasons. At the same time, English laws seem to put more emphasis on having a common law or judge-made law background. On this anvil, one begins to understand the differences between the respective legal systems and their values, which is a basic difference in approaching the issues even in cases where their objectives may be the same.
The EC law on jurisdiction is more inclined towards the importance of predictability and certainty in the rules than towards matters like justice and flexibility as can be understood upon reading the 11th recital of the Regulation that states: ‘The rules of jurisdiction must be highly predictable and founded on the principle that jurisdiction must generally be based on defendant’s domicile and jurisdiction must always be available on this ground save in few defined situations…’
Whereas the only mention of flexibility in the Regulation is contained in the 26th recital, it provides that the regulation rules may be flexible only to the extent of allowing specific procedural rules of member states.
According to the EC law on jurisdiction, it seems that this particular requirement of predictability is necessary for parties to a dispute to know exactly within which jurisdiction(s) they can sue and be sued. The EC law gives priority to the primary objective of harmonizing the laws of the jurisdiction within the territory of its member states and therefore makes it mandatory to uphold the strict accuracy to its principle while giving secondary status to the objective of justice for the parties. The EC law and the traditional English law may very well have their own justifications and reasons for following a particular system. Still, it is submitted that this seems to be a matter of difference in the manner of approach or attitude and a matter of prioritization of the objectives by both the EC law and traditional English law on jurisdiction. The list of cases mentioned hereinafter for the benefit of elucidating the topic under discussion is, as shall be evident, decided under the Brussels Convention, which can be used for interpreting the rules under the Regulation.
Comparison of EC Law v English Law:
1. Bases of Jurisdiction: The most significant difference between the traditional English laws and the EC law on jurisdiction is the element of discretion that the respective body of law gives to the judges in determining the jurisdictional issues. Under the Regulation, the assumption of jurisdiction is largely mandatory, with the court not being free to decline jurisdiction. In contrast, under the English traditional rules, the assumption of jurisdiction is discretionary.
The Regulation applies only to civil and commercial matters in nature and not to those that have been explicitly excluded from its application (e.g., Cases about arbitration, succession, wills, and bankruptcy have been excluded from the application of the Regulation). Whereas the traditional English rules apply not only to cases that fall outside the scope of Art.1 of the Regulation but also to those that fall within its scope where the defendant is not domiciled in any member state, and the jurisdiction is not allocated by any of the rules which apply, regardless of domicile.
A. In the traditional English rules, the court has jurisdiction in three situations:
i. If the defendant is present in England (though the court may stay the proceedings on the ground that another court is a more appropriate forum). Jurisdiction under this situation depends on the defendant’s presence in the country, whereby the claim form may be served to him.
ii. If the defendant submits to the court’s jurisdiction, the defendant submits by not contesting jurisdiction or arguing the case on its merits.
iii. If the claim falls within Practice Direction: (CPR PD 6B) (which is dependent on the court permitting to serve process out of its jurisdiction) where the court considering England to be the most appropriate forum (despite the absence of reasons under i. or ii. based on some connection between England and the defendant. There seems on a perusal of this provision, a functional similarity with Arts.5 & 6 of the Regulation.
B. Jurisdiction under the EC Law: Except for certain instances where the applicability of the EC law on jurisdiction does not depend on the defendant’s domicile (Art.22 Exclusive Jurisdiction and Art.23 Prorogation of Jurisdiction), the EC law on jurisdiction rests on the domicile of the defendant, and makes it mandatory for the court of a member state to determine the jurisdictional issues and other issues where the defendant is domiciled in its jurisdiction.
The Brussels Regulation does provide for instances where the defendant can be sued in another Member state though he is not domiciled in that particular state; these cases have been very explicitly outlined in the regulation leaving little or no scope for the exercise of discretion by the judge. However, Art.4 of the Regulation provides that a member state can (subject to the provisions of Articles 22 and 23 of the Regulation) exercise its traditional laws of a jurisdiction in cases where the defendant is not domiciled in any of the member states. This provision, while giving scope for the applicability of the traditional rules, has at the same time also given rise to the idea that there is now only one source of jurisdictional rules, namely the Brussels Regulation.
C. Mandatory rules under EC law v Forum Conveniens:
Forum convenience: upon bringing an action in England, the claimant has to prove that it is the forum convenient; that is, the matter can be tried therein in the interest of justice, and the relevant factors in considering this are the same as under forum nonconvenient. Forum conveniens is determined in two stages, namely:
i. Where in the 1st stage, the claimant should show that England is an appropriate forum (considering, among other things, the nature of the dispute, issues involved, and in cases where relevant, the availability of witnesses.
ii. At the 2nd stage, the claimant must establish that even if there is another forum, justice will not be done, showing that England is the more appropriate forum.
However, England may not be the appropriate forum where the claimant will only be deprived of legitimate personal or juridical advantage like a higher compensation award.
Mandatory rules under EC law: Unlike the Traditional English rules, under the Regulation, if the court has jurisdiction under any of the provisions thereof (e.g., Arts.2 or 5), it cannot refuse jurisdiction because some other court is best suited to determine the matter, showing the mandatory nature of the rules.
In a case of lis pendens (Art.27) or proceedings in 2 or more states (Art.28), the Regulation gives precedence to the court first seized (Art.29 & 30) regardless of the actual jurisdiction being in the court 2nd seized.
These rules are mandatory so far as they fall within Art.1 of the Regulation; no deviation thereof is permitted on the grounds of justice or convenience or any like reason. Paraphrasing the reasoning of the ECJ, the reason for such mandatory compliance is the promotion of legal certainty and predictability and the free flow of judgments amongst the member states based on the codified rules in the Regulation, which is not dependent on any judge’s discretion.
2. Forum inconvenient and lis pendens:
A. Forum inconvenient: Jurisdiction under the traditional rules also depends on whether the court shall decline jurisdiction or stay the proceedings. An English court shall, in determining jurisdiction under its traditional rules, try to ascertain which is the more appropriate forum and may even stay its proceedings in cases where it thinks that another forum is best suited for the case and in doing so, it employs what may be called the basic test, i.e., whether it is in the interest of the parties and would meet the interest of justice.
However, the Spiliada Case promulgated another test, i.e., ‘the two-stage test’ for deciding the more appropriate forum for determining the case before the court. Where the court considers, in the 1st stage, which is prima facie, the most appropriate forum (burden being on the defendant) based on connecting factors like (territorial connection) place where the parties reside, the law applicable, the availability of witnesses (if any), the balance of convenience (applied in Spiliada itself) and where proceedings between the same parties arising out of the same dispute are pending before a foreign court, show how long the trial has been in existence which would be a strong argument in favor of forum non-convenient where such case is on the verge of resolution one (unlike Art. 27 of the Brussels Regulation, the traditional rules do not endorse a simple ‘first come, first serve’ approach) and. In contrast, in the 2nd stage (burden-shifting on the claimant), considering the relevant connecting factors, it thinks that the dispute is more closely connected with a foreign court.
B. Lis alibi pendens: The doctrine of Lis Pendens under Art.27 of the Brussels Regulation makes it mandatory for the court which is second seized (in proceedings having the same cause of action and same parties and the dispute is before the courts of two or more member states) to stay its proceedings in favor of the court first seized until such time till the latter has not established its jurisdiction notwithstanding that the court second seized may actually have prima facie grounds for the exercise of its jurisdiction (For example Arts. 22 and 23).
In contrast to the traditional English law, the Brussels Regulation gives absolutely no discretion to the judge to stay its own proceedings and grant jurisdiction in favor of another court on the grounds of availability of a more appropriate forum. For instance, in the Owusu case wherein the European Court of Justice held that Brussels Convention precludes a Court of a contracting state from declining jurisdiction conferred on it by Art.2 on the ground that a court of a non-contracting state would be a more appropriate forum for the trial of the action even if the jurisdiction of no other state is in issue or the proceedings have no connecting factors to any other contracting state. This, even though the person putting up a plea of forum non convenient, can prove that he may not be able to secure justice in a foreign court or that he is, in fact, devoid of any access to effective justice.
The doctrine of Lis Pendens may seem like a simplified manner of approaching simultaneous proceedings in different courts vis-à-vis the doctrine of forum non convenient, which is dependent on the judge’s discretion; and also seems logical in cases where there could be a possibility of having two conflicting decisions as may happen under the traditional rules. At the same time, it also seems arbitrary in that it makes it mandatory for the court first seized to decide upon its jurisdiction before the court second seized, regardless of any pressing evidence adduced that places jurisdiction elsewhere.
The doctrine of lis pendens seeks to support the object of the drafters of the Brussels Regulation, which is to promote confidence in the internal market, to reduce disparities between national laws on the jurisdictional front; and to strengthen the belief of persons domiciled in the member states under the present jurisdictional set-up, to safeguard their legal and large monetary interests and this, in turn, leads to the creation of legal certainty which view or observation is supported by several bearers of intellect in the concerned field of study.
Art. 27 of the Regulation requires the court second seized to stay its proceedings until the court first seized has established its jurisdiction. This provision seems to give ample room for parties to commercial matters, particularly to take advantage of the loopholes available in the legal framework established under the Brussels Regulation, which is best explained by the explanation of the term Italian Torpedo.’
Art. 27, while intending certainly has ended up providing an avenue for a rat race of sorts to the courthouse for the parties having a dispute in civil and commercial matters as well as those that wish to obstruct the course of justice. A party seeking to prolong the outcome of the dispute can approach the court of a member state which otherwise on the merits of the case may not have the requisite jurisdiction to hear it (e.g., Italy); and where the hearing and official determination of only the jurisdictional issues may take long enough to frustrate the objectives of the party seeking an early resolution or remedy for the mischief of the other party.
In the Transport Castelletti case where a Danish shipping company had to contest a jurisdictional issue before the Italian court for eight years when the receiver of the cargo under its Bill of Lading brought proceedings in Italy this even though the Bill of Lading which is delivered to an Argentinean shipper for a voyage from Argentina to Italy had explicitly mentioned a ‘choice of court clause’ favoring England. This outcome begs the question of any provisions that guarantee a fair and speedy delivery of justice. This requirement seems to have been overlooked even by the European Court of Justice, especially regarding the lack of efficiency that the Italian courts have shown in dispensing speedy remedies.
This issue was once again put to the test in the Erich Gasser GmbH v MIST Srl which was about patent rights and also involved a ‘choice of court agreement’ (Art.17 of the Brussels Convention) whereby the parties are free to choose which court shall have exclusive jurisdiction or if the parties require they may even make it a non-exclusive jurisdiction clause by stating the courts that shall have jurisdiction.
Gasser, an Austrian firm, and MISRATA, an Italian Company, had submitted to the exclusive jurisdiction of an Austrian court by statement granting jurisdiction to the Austrian court contained in all invoices transacted under by the parties. But knowing that there was a possibility that Gasser may file a suit under the choice of court agreement, Mist, with the intent to prolong the proceedings and the outcome of the case, sought to invoke the jurisdiction of the Italian court and filed a suit there, thereby making it the court first seized of the matter.
The case was pending before the Italian court for a period of eight years to have its jurisdiction established. However, it could be seen from the invoices transacted between the parties to the dispute that there was an explicit clause which was as per the provisions of Art.23, namely, i. the agreement was in writing; ii. in the form with accords with practices which the parties have established between themselves; or iii. in international trade or commerce in a form which accords with a usage of which the parties are ought to have been aware and which is in widely known in such trade or commerce or regularly observed by the parties to the contract of the type involved in the particular trade or commerce.
3. Preclusion of jurisdiction under the English Law and EC law: Under the traditional English law, when the court finds itself to be the more appropriate forum, it may grant an anti-suit injunction, i.e., an injunction restraining a party from instituting or pursuing proceedings in another court, which is generally sought by defendants in foreign proceedings praying that the matter is decided in England where the grounds for an injunction can include: unconscionable behavior, ends of justice and contractual reasons, i.e., arbitration agreement.
In contrast to the English law under the Brussels Regulation, the court 1st seized will determine its jurisdiction first, and the courts 2nd seized shall (despite having jurisdiction over the matter on all relevant grounds) stay its own proceedings and not be permitted to issue an anti-suit injunction and will have to await the determination of jurisdiction by the court first seized. This, even though the proceedings in the court first seized, might be brought in bad faith and frustrate the court’s proceedings second seized. (Based on the view of the ECJ that the states must trust each other, which seems like allowing the interest of justice in favor of an individual, as in Turner v Grovit to be overlain by the interest of the state)
The scope of jurisdiction in recognition and enforcement of judgments: A court cannot recognize or enforce a judgment without the requisite jurisdiction. The set of rules applicable would depend primarily on the country where the judgment was given. Recognition of the traditional law operates without impediments regarding many countries’ judgments, including many of the Middle Eastern countries, the non-common wealth countries including therein the US, Asia, and Africa. Enforcement of the common law is dependent on bringing ordinary proceedings, whereas the statutory regimes require specific procedures, i.e., Registration.
In contrast to the English law, under the EC law on recognition and enforcement contained in Chapter III of the Regulation, jurisdiction is available only in civil and commercial matters; where the court of a member state gives the judgment, the EC law will only give recognition and enforce those judgments that are given under the Regulation. Unlike the common law, there is no special procedure for recognition and enforcement, yet the number of defenses is limited.
Critical Analysis: One critical aspect favoring forum non convenient is the noble and paramount objective, namely, the interest of justice, which would have rightly served the need of cases like Gasser and Turner v Grovit had the objective of the EC law been so. The requirement of maintaining comity amongst nations is given preference over doing justice to the parties; a codified structure and interpretation seem to overrule practicality and logic.
Due to cases like Gasser, there is a possibility that the reasoning of the European Court of Justice may be able to change the meaning behind the maxim pacta sent servants giving rise to instances where the terms contained in the express contracts like jurisdiction agreement may be ignored or subverted in pursuance of sinister objectives like causing delays; the frustration of commercial enterprise and cause heavy losses.
There are certain provisions in the Regulation (for instance, Art.22 (4)) that run contrary to the EC law’s objective, as stated hereinbefore, leaving many unanswered questions. It may also be argued that the definition of lis pendens in Art.27 is quite technical and mechanical, is hinged on the 1st seized rule implying a first-come, first-serve basis of justice, whereas in the traditional English laws, there is no requirement of a definition; can deal with most problems with the help of discretionary rules. But matters like anti-suit injunctions under the traditional rules run contrary to modern objectives like nations’ comity.
The Regulation excites the jurisdiction’s domestic laws by member states under circumstances where the Regulation is applicable. Though the intention is to help parties to civil and commercial matters discern their rights and liabilities lie, in doing so, the EC law has, in fact, taken away much of the English Court’s discretionary power, as is evident from the outcome of the Owusu case.
Conclusion: It is submitted that it is not only the difference of attitudes or manner of approach that differentiates the traditional English law and the EC law on jurisdiction; but also the nature of these rules which as regards the EC law on jurisdiction is mandatory unlike- the traditional English law which is discretionary.
There have been instances wherein, based on the traditional rules on jurisdiction, the English Courts have assumed jurisdiction in cases where it was clearly not the most appropriate court as per its two-stage test promulgated in the Spiliada case; yet to do justice to the parties therein, it has even given legal aid to the South African citizens on the English taxpayer’s account, which in itself goes to show the extent to which the English court can be flexible.
The traditional rules’ objective is clear, i.e., achieving justice for the parties to a dispute regardless of any set parameters. Still, this very factor makes a party to a commercial dispute uncertain of the jurisdictions it may or may not get sued in, which contingency the Regulation endeavors to clarify to achieve its objective of building confidence in the European commercial market.