The Brussels Regulation is the primary instrument covering jurisdiction and the enforcement of judgements in commercial matters within the European Union. A revised version of this Regulation1 (“Brussels Regulation Recast”) took effect from 10 January 2015.
Certain key provisions remain unchanged such as:
- The default rule that parties shall be sued in their place of domicile (Article 4)2;
- The alternative rule that in matters relating to a contract, a party may be sued in the courts for the place of performance of the obligation in question (Article 7);
- The rule that in matters relating to tort or delict a party may be sued in the place where the harmful event occurred or may occur.
The rule upholding exclusive jurisdiction agreements has been extended to cover agreements between any party regardless of their domicile (Article 25).
However amongst the changes it is of particular interest that there are now provisions that may prevent, or at least curtail, the abuse of process widely known as the Italian torpedo3.
The Italian Torpedo
In order to avoid parallel proceedings the regulations provide4:
where proceedings involving the same cause of action and between the same parties are brought in the courts of different Member States, any court other than the court first seised shall of its own motion stay its proceedings until such time as the jurisdiction of the court first seised is established.
In the past, this “first in time” rule has been upheld even where the first proceedings have been started in breach of agreed exclusive jurisdiction provisions. This situation has enabled parties to intentionally start proceedings in jurisdictions where the process is known to be slow (Greece and Italy are the most well-known examples) in order be the court “first seised” and thereby to frustrate the pursuit of proceedings by another party in accordance with the agreed jurisdiction provisions. This tactic is the so-called Italian torpedo.
The Brussels Regulations Recast have now attempted to address this abuse by new provisions at Article 31 which state:
where a court of a Member State on which an agreement ……………. confers exclusive jurisdiction is seised, any court of another Member State shall stay the proceedings until such time as the court seised on the basis of the agreement declares that it has no jurisdiction under the agreement.
This amends the “first in time” rule and should now enable the court named in the exclusive jurisdiction provisions to consider if it has jurisdiction and to require any other court (including the first seised) to stay its proceedings. However it should be noted that this only applies to exclusive jurisdiction agreements and there remains uncertainty as to how this would work with hybrid or asymetric jurisdiction provisions5.
Excluding Arbitration from Brussels Regulation and the Italian Torpedo Issue
Arbitrations are excluded from the Regulations under Article 1.2. However a variant of the Italian torpedo has hitherto been used to frustrate the effect of arbitration provisions. In the now notorious West Tanker case6 a claimant sought to uphold an arbitration clause by seeking an anti suit injunction from the English Courts to restrain the defendants from maintaining legal proceedings that they had started in Italy. The eventual decision from the European Court of Justice was that this was a claim for damages which fell within Regulations and thus preliminary question of whether the arbitration clause should apply was also within the Regulations and thus one that the court first seised (the Italian Court) should have jurisdiction to decide (despite the arbitration clause). Accordingly the claim for an anti suit injunction was rejected.
This issue has not been directly addressed in the body of Brussels Regulation Recast. However the recitals (preamble) now appear to recognise the issue by stating (Recital 12) that:
- nothing prevent a court seised of an action in a matter that is the subject of arbitration agreement from referring the parties to arbitration; and
- any ruling as to whether or not an arbitration agreement is void should not be subject to the Regulation for the purposes of recognition and enforcement.
It is to be hoped that with the new Regulation opportunities for the firing of the Italian torpedo will now be much diminished.
1 Regulation (EU) 1215/2012
2 Numbering as in the recast Regulations.
3 This name is believed to originate from an article by Prof Franzioni dating from 1997.
4 Article 29
5 See Mauritius Commercial Bank Ltd v Hestia Holdings Ltd and another  EWHC 1328 (Comm)
6 Allianz SpA v West Tankers Inc (Case C-185/07)