KEY POINTS Feature ––A agreement complies with the requirements of Art 25 of the Brussels Regulation (Recast) where it specifies a Member State court regardless of the of the contracting parties. ––The English High Court has held that asymmetrical jurisdiction agreements fall within Art 25. ––A party does not require permission to serve out of the jurisdiction where it establishes jurisdiction under Art 25. ––Where a jurisdiction agreement is exclusive, the English court does not have to stay proceedings even where it is second seised. ––Where jurisdiction is established under Art 25, there is no basis to stay English proceedings in favour of a Third State court regardless of how advanced the foreign proceedings are. ––Unless certain measures are taken, such as entering into a UK–EU Agreement with the EU to ensure the continued application of Brussels Regulation (Recast), may have a serious impact upon the current position.

Authors Ishfaq Ahmed and Andrew Dinsmore The strengthening of jurisdiction agreements following Brussels Reg (Recast) and the impact of Brexit

This article considers the practicalities of commencing proceedings with a jurisdiction ‘The claimant may serve the claim agreement under the EU Regulation 1215/2012 (the Brussels Regulation (Recast)) and form on a defendant out of the United the Civil Procedure Rules before considering the role of jurisdiction agreements in Kingdom where each claim made against situations of parallel proceedings and how Brexit may impact on these developments. the defendant to be served and included in the claim form is a claim which the court has power to determine under the INTRODUCTION Art 23 of the EU Regulation 44/2001, the Judgments Regulation and It is commonplace for financial Brussels Regulation) where the parties ■contracts to contain a jurisdiction selected a Member State court “regardless ... agreement in favour of England, even where of their domicile”. Thus, it was no longer a neither party is domiciled in England or requirement that one of the parties had to (v) the defendant is a party to an even in Europe. Often these jurisdiction be domiciled in a Member State. This has agreement conferring jurisdiction within STRENGTHENING OF JURISDICTION AGREEMENTS FOLLOWING BRUSSELS REG (RECAST) AND BREXIT(RECAST) REG BRUSSELS FOLLOWING AGREEMENTS JURISDICTION OF STRENGTHENING agreements are “asymmetrical” such that had two important consequences. article 25 of the Judgments Regulation.’ the lender has the option to bring suit in First, any judgment entered pursuant any court of a competent jurisdiction, but if to a jurisdiction agreement in favour of While more often than not permission the borrower seeks to bring suit they must a Member State court could be enforced would have been granted where there do so in England. under the Brussels Regulation (Recast). was a jurisdiction agreement between This article seeks to outline the This is particularly important because two non-Member State parties in favour of practicalities of commencing such the Brussels Regulation (Recast) also England, this is nevertheless a significant proceedings under a jurisdiction agreement removed the exequatur procedure whereby change because: (i) permission was before considering their role in parallel a judgment had to first be recognised in discretionary and the jurisdiction agreement proceedings and the potential impact of the state of enforcement before it could was one factor in the Brexit on this area. be enforced. Thus, instead of enforcement analysis, being a particular concern where being a two-stage process, recognition the jurisdiction agreement was non- COMMENCING PROCEEDINGS followed by enforcement, it became a one- exclusive or could be argued to be so;1 (ii) UNDER AN ENGLISH JURISDICTION stage process, direct enforcement. even if it was likely that permission would AGREEMENT Secondly, this had a significant impact be granted, there was a risk that a hearing The Brussels Regulation (Recast) came on English procedural law because it would be ordered to argue the issue, which into effect in January 2015 and introduced removed the requirement for permission to would substantially increase the costs of a significant change to the enforceability serve out of the jurisdiction when dealing commencing an action and cause delay. of jurisdiction agreements under the EU with two non-EU parties. As a result, Civil Importantly, under Art 25 jurisdiction is regime in providing that a jurisdiction Procedure Rules (CPR), r 6.33(2)(b)(v) exclusive unless the parties have agreed agreement complied with Art 25 (formerly provides: otherwise and it expressly makes the validity

476 September 2017 Butterworths Journal of International Banking and Financial Law STRENGTHENING OF JURISDICTION AGREEMENTS FOLLOWING BRUSSELS REG (RECAST) BREXIT AND Biog box Ishfaq Ahmed is a barrister at St Philips Stone practising in shipping and . Feature Email: [email protected]

of the jurisdiction agreement separate from there is a jurisdiction agreement in the Brussels Regulation (Recast) and an the substantive contract. Thus, under the favour of England between two non-EU English court must allow proceedings new provisions these risks are significantly defendants. to continue despite there being parallel reduced. proceedings in Third States, except perhaps The ambit of the EU regime, in JURISDICTION AGREEMENTS IN on case management grounds.3 particular Art 25, has also been interpreted PARALLEL PROCEEDINGS recently in Commerzbank Aktiengesellschaft The Brussels Regulation (Recast) has THE POTENTIAL IMPACT OF BREXIT v Liquimar Tankers Management Inc and also strengthened the role of jurisdiction It is clear from the above that jurisdiction another [2017] EWHC 161 (Comm) by agreements in situations of parallel agreements have been substantially the English High Court to extend to proceedings in two respects. strengthened under the Brussels asymmetrical jurisdiction agreements. First, Art 31(2) makes clear that where Regulation (Recast): it is now simple to Financial institutions prefer such the jurisdiction agreement is exclusive commence proceedings where one has a agreements as they give them a choice the named court does not have to stay its jurisdiction agreement; the court does of jurisdiction whereas it restricts the proceedings where second seised under not have to stay proceedings in favour of a other party, typically a borrower, to one Art 29, as would normally be the case. Member State where second seised if the jurisdiction. Liquimar is consistent with the This change was introduced to address jurisdiction agreement is exclusive; and traditional English approach of upholding the problem of parties commencing there is no ability to stay proceedings in jurisdiction clauses. However, some doubt proceedings in another Member State favour of first seised Third State courts remains as to whether other EU courts,2 with a view to tactically delaying litigation where jurisdiction is established under and ultimately the Court of Justice of the and increasing costs for the weaker party. Art 25. This is to be welcomed by the , would accept such an Thus, where a party has an exclusive financial sector and is part of a wider trend interpretation. jurisdiction agreement in circumstances towards strengthening the enforceability Nevertheless, taking these developments where proceedings are already underway of jurisdiction agreements.4 Brexit could, together, it is now simple for a party to in another Member State court they can however, undermine this position. commence proceedings under a jurisdiction confirm on form N510 that: The Commercial Bar Association5 and agreement (asymmetrical, exclusive and the Bar Council6 have recently published non-exclusive). The party attaches court ‘I state that each claim made against their views on the best way for the United form N510, which is entitled “Notice for the defendant to be served and included Kingdom to proceed following Brexit.7 Service Out of the jurisdiction where in the claim form is a claim which the There are, essentially, five options: permission of the court is not required”, to court has power to determine under (1) The United Kingdom could sign its claim form and confirms that: the Judgments Regulation and the an agreement with the European defendant is a party to an agreement Union which is analogous to that ‘I state that each claim made against conferring exclusive jurisdiction within which Denmark signed in 2005 the defendant to be served and included article 25 of the said Regulation.’ when they agreed to the application in the claim form is a claim which the of the Brussels Regulation. There is court has power to determine under the Second, the Brussels Regulation precedent for a non-Member State to Judgments Regulation and (Recast) directly addresses the issue of do so as Poland joined between 1999 parallel proceedings with Third States, and 2004 when they were not an EU (a) no proceedings between the parties at Arts 33 and 34, which had been or EFTA State. concerning the same claim are pending causing problems since the decision of (2) The UK could sign the Lugano in the courts of any other part of the Owusu v Jackson [2005] Q.B. 801. In Convention, which is currently United Kingdom or any other Member short, Arts 33 and 34 concern identical signed by the EU, Iceland, Norway State; and and related proceedings respectively and and Switzerland (the EFTA States). contain a number of pre-conditions before While the UK is currently a signatory (b) the defendant is a party to an permitting a stay of proceedings where it to this by virtue of their membership agreement conferring jurisdiction is ‘necessary for the proper administration of the EU, on Brexit this would cease within article 25 of the said Regulation.’ of justice’ (as cross-referenced to recital and they would essentially be joining 24). The key point for present purposes is Iceland, Norway and Switzerland. In summary, therefore, the Brussels that jurisdiction must be based on Arts 4, (3) The UK could sign the Hague Regulation (Recast) has significantly 7, 8 or 9 such that it appears that where Convention on Choice of Court simplified the process of establishing jurisdiction is based on Art 25, the court Agreements 2005 (the Hague jurisdiction in the English court where has no ability to stay proceedings under Convention) , which is currently

Butterworths Journal of International Banking and Financial Law September 2017 477 Biog box Feature Andrew Dinsmore is a barrister at St Philips Stone practising in international commercial litigation and arbitration. Andrew has recently assisted in the update of Chapter 11 of Dicey, Morris & Collins, The Conflicts of Laws, 15th edn, which concerns in personam jurisdiction, and sat on the ComBar Working Groups that considered the implications of Brexit on the , acting as a co-rapporteur for the position paper; he regularly acts in international disputes with jurisdictional and issues. Email: [email protected]

signed by EU members, Mexico and jurisdiction agreements, it is limited to 3 There was discussion of the court’s ability Singapore. Again, the UK is currently exclusive jurisdiction agreements (with to stay proceedings on case management a signatory to this by virtue of their no direct authority to suggest it applies to grounds prior to the Brussels Regulation membership of the European Union. asymmetrical jurisdiction agreements); it (Recast) coming into force in Plaza BV On Brexit they would essentially be does not cover a number of important areas v Law Debenture Trust Corp Plc [2015] joining Mexico and Singapore. of practice (including carriage of goods, EWHC 43 (Ch), §123–130 and Ferrexpo (4) The UK could seek to persuade the insolvency and anti-trust); and it does AG v Gilson Investments Ltd [2012] EU to sign an entirely new jurisdiction not have the same advantages in relation EWHC 721 (Comm), [2012] 1 C.L.C. 645, regime or to revise the terms of the to parallel proceedings. As a result, it §199–200. Lugano Convention 2005 which would be too limited to rely solely on this 4 As also seen in the Hague Convention on included the same advantages as the instrument. Choice of Court Agreements 2005. current regime. Fourthly, it is hoped that entering 5 See www.combar.com/news/combar-brexit- (5) The UK could do nothing. into a UK–EU Agreement with the EU papers/ to ensure the continued application of 6 See www.barcouncil.org.uk/media/508513/ ComBar has recommended that the Brussels Regulation (Recast) would the_brexit_papers.pdf the UK should: (1) enter into a UK- minimise changes to the CPR provisions as 7 See further Aikens & Dinsmore, EU Agreement with the EU to ensure to service outlined above which assist in the “Jurisdiction, enforcement and the conflict the continued application of Brussels protection of English jurisdiction clauses. of laws in cross-border commercial Regulation (Recast); (2) become a signatory disputes: what are the legal consequences to the Lugano Convention; (3) become a CONCLUSION of Brexit?” (2016) 27 (7) EBLR 903; signatory to the Hague Convention; and The Brussels Regulation (Recast) and Dickinson, “Back to the future: the UK’s (4) adopt transitional arrangements to connected CPR amendments have EU exit and the conflict of laws”, Vol. ensure a smooth transition and adopt the substantially strengthened the role of 12, Journal of Private recommendations proposed by the Bar jurisdiction agreements in resolving 195 (2016); Masters & McRae, Journal of Council. international disputes in England: the International Arbitration, Special Issue, This would be a welcome course in the commencement of proceedings is simple, Vol. 33, 483–500, “What does Brexit mean present context for four reasons. there are limited situations in which they for the Brussels Regime?” (2016); Prof. First, it is not realistic for the UK to must be stayed; and enforcement in EU Burkhard Hess, “Back to the past: Brexit simply do nothing and it appears that there Member States is now a one-stage process. and European International Private and is no political appetite or time to negotiate This undoubtedly strengthens Britain’s Procedural Law”, Practice of International an entirely new treaty. financial sector both domestically and Private and Procedural Law (IPrax), Vol. 36, STRENGTHENING OF JURISDICTION AGREEMENTS FOLLOWING BRUSSELS REG (RECAST) AND BREXIT(RECAST) REG BRUSSELS FOLLOWING AGREEMENTS JURISDICTION OF STRENGTHENING Secondly, it would be inadequate to abroad but may be undermined by Issue 5, 409, September/October 2016. only sign the Lugano Convention because Brexit if the UK does not sign a EU–UK it requires a party to the jurisdiction Agreement, analogous to that which agreement to be domiciled in a Contracting Denmark signed in 2005, to ensure the State (Art 23). Further, there is no continued application of the Brussels equivalent to Art 31(2) of the Brussels Regulation (Recast) and/or pursue further Regulation (Recast) with the result that measures such as signing up to the Hague there is no protection against a party Convention. n commencing proceedings in another Contracting State to delay proceedings 1 The discussion of jurisdiction clauses as and increase expense. Finally, there are no part of the forum non conveniens analysis provisions addressing parallel proceedings features in The Eleftheria [1969] 1 Lloyd’s with Third States such that the problems Rep. 237; British Aerospace v Dee Howard Further Reading: created by Owusu v Jackson will return. [1993] 1 Lloyd’s Rep. 368; The Rothnie ––The Hague Convention on Choice of While there may be scope to negotiate [1996] 2 Lloyd’s Rep. 206; BP v Aon [2006] Court Agreements – an unexpected a “revised” Lugano Convention that 1 Lloyd’s Rep. 549. game changer for English schemes of incorporates these changes, at the time of 2 See, for example, the French decision in arrangement? [2016] 11 JIBFL 641. writing it does not appear that there is real Mme X v. Société Banque Privé Edmond ––Foreign company schemes: is an demand for such a move. de Rothschild 13, First Civil Chamber, asymmetric jurisdiction clause for Thirdly, while the Hague Convention 26 September 2012, Case No. 11-26022. choice of English law enough for is directly aimed at the enforcement of jurisdiction? [2017] 7 JIBFL 410.

478 September 2017 Butterworths Journal of International Banking and Financial Law