English Traditional Rules and Brussels I Regulation

In seeking to discuss whether the idea that “Commercial jurisdictional rules should be constructed to ensure that justice can be achieved in the most appropriate court. In this respect, the English traditional rules are greatly superior to those contained in the Brussels I Regulation (EC 44/2001)” is agreeable, this essay will begin by looking to resolve the issue of jurisdiction in relation to commercial cases as and when they arise internationally. It will then be necessary to outline the remit of English traditional rules under the Civil Procedure Rules 1998 before focussing in upon the terms of Brussels I regarding matters of jurisdiction. Therefore, this essay will argue that, since commercial transactions have developed internationally through the instigation and development of the Internet, with regard to matters of jurisdiction regarding commercial cases, Brussels I is in fact superior to English traditional rules in this area. Finally, this essay will conclude with a summary of the key points that have been derived from this discussion regarding whether the aforementioned statement is true and English traditional rules are superior to those in the Brussels I Regulation with regard to commercial jurisdiction.

Introduction – The importance of determining commercial jurisdiction

Traditionally, legal conflicts resolution between parties based in different countries is founded upon recognising the territory where a country’s courts utilise national laws to rule on disputes as an when they arise in the circumstances within their jurisdiction. However, the Internet (along with other forms of technology’s) development as a commercial option for businesses and consumers alike, has served to provide the traditional means for resolving disputes based on territory’s recognition has been complicated by the fact Internet activities now traverse physical boundaries. Therefore, private international law (‘conflict of laws’) can be utilised to address these issues [1] to ascertain the courts with jurisdiction to settle disputes involving foreign elements and the conditions courts must meet for their decisions to be recognised and enforced in a given country, whilst also determining the applicable laws for solving disputes internationally. [2]

Private international law does not, however, have regulations and rights to bind different countries because it is municipal law that only regulates the behaviour of the private parties and applies because of the foreign element that provides an international dimension. But, although each country could have their own private international laws, these laws are still founded upon developments internationally even though there is still a lack of harmonisation so international treaties are needed to fill the gaps. The reason for this is there is no telling if a given ruling will be the same in different jurisdictions because they each recognise different rules because they are neither substantive nor procedural. For example, ‘real property’s legal status is determined on the basis of international treaties so the basic principle involves making the best positioned court geographically responsible for solving disputes. [3] Therefore, private international law does not deal with the question but merely serves as a rule of acknowledgement that determines which country’s laws resolve a given dispute regarding international movements of goods and services. The reason for this is that international trade has been going on for centuries so disputes are bound to arise leading to private international law’s development. [4]

As a result, one is left to wonder if the parties to a given regulation are located in different countries because it is a question of whether the courts of the country of origin should have jurisdiction or the courts of the country of destination. [5] With this in mind, although there is not a fully-fledged private international law regime, there is still other unified private international law to be considered because, whilst private international law is still a matter of municipal law, the level of unification attained between countries is good. On this basis, it is necessary for all consumers to have confidence in the system of redress regarding the development of contracts to know what applies and in what country’s courts a given dispute will be dealt with where it arises. [6] Therefore, the European Union’s (EU’s) Brussels I Regulation [7] is fundamental since it both replaced and modified the 1968 Brussels Convention on Jurisdiction & Enforcement of Judgements in Civil & Commercial Matters (‘the EEX–Treaty’) to determine jurisdiction and the forum in a given case. Brussels I’s signatories have included all EU Member States (except Denmark) to provide greater protection for consumers. However, Brussels I is one of three specific regimes in the EU applicable to regulating consumer contracts that also includes the EEX-Treaty governing jurisdiction between Denmark and other Contracting States [8] along with the Convention of 16th September 1988 on Jurisdiction & the Enforcement of Judgements in Civil & Commercial Matters (‘the Lugano Convention’) [9] that governs jurisdiction between EEX Contracting States and the European Free Trade Association (EFTA) Countries allied to Poland.

What are the English traditional rules in relation to matters of commercial jurisdiction?

With a view to considering the remit of English traditional rules, the concept of private international law relates to the element of domestic law concerned with those cases also found to include a foreign element in a given dispute leading to the Private International Law (Miscellaneous Provisions) Act 1995 to resolve choice of law issues. [10] This is because all too often a conflict of laws between the laws of England and that of another jurisdiction where parties are separated internationally so it is necessary to ascertain if either English or foreign courts have jurisdiction regarding a dispute with a foreign element and also which country’s law applies along with when an English court enforces a foreign court’s earlier judgement. [11] For example, there is often an element of conflict of laws between European and English law where there are parties from different countries so there is now a necessity for courts to determine whether English or foreign courts have jurisdiction, which nations’ law applies and when an English court will enforce a foreign court judgement. [12] The legal position is illustrated by the fact the English legal system uses choice of law rules meaning both contractual and non-contractual issues are generally governed by the law where the event causing the loss transpired for ‘intranational’ and international matters leading to disputes. [13]

Therefore, although UK law consists of both common law and statute, principally the tort of negligence and contract have been used to better protect consumers. Difficulties have also arisen because a claim for damages is limited since pure economic loss may not even be recoverable. [14] Nevertheless, Rule 6.36 of the Civil Procedure Rules (CPR) 1998 has served to recognise that, with regard to any proceedings that Rules 6.32 or 6.33 do not apply to, a claimant could look to serve a claim form beyond the jurisdiction with the particular court’s permission in the event that any of paragraph 3.1 of Practice Direction 6B’s grounds serve to apply. [15] But, in those cases where a defendant is not found to be domiciled in a given Member State, there is a need for claimants to look to make applications to the particular court for permission to be able to serve a claim form beyond the jurisdiction. At the same time, however, there is a need to appreciate that Rule 6.37 has served to makes further provision in relation to a given application for permission that needs to establish which of the grounds in paragraph 3.1 of Practice Direction 6B is relied upon. [16] For example, it was recognised at paragraph 3.1(8) of Practice Direction 6B that a claim is considered to have been made in tort in the event that – (i) damage was sustained in the jurisdiction; or (ii) the damage sustained resulted from an act in the jurisdiction. [17]

A court will look to account for an array of issues with a view to ascertaining if permission to serve a claim out of the jurisdiction should be granted that has been recognised as going beyond a simple consideration of if the particular claimant’s grounds for a claim fall within one of the grounds that have been delineated under paragraph 3.1 of Practice Direction 6B. [18] Of these factors, one of the most fundamental is involved with determining if England is in fact the forum conveniens (i.e. the most appropriate place for bringing about a given claim) in the circumstances of given case. Rule 6.37(3) of the CPR 1998 then goes on to state the particular court on the facts of a given will not look to provide permission to serve out a claim form beyond the jurisdiction unless the court is found to be satisfied England and Wales is deemed to be the proper place for bringing a claim. [19] However, any applications that are made for permission to look to serve a given claim form beyond the jurisdiction are made without notice in practice with the burden upon the claimant to prove the English court system is the appropriate forum – although the defendant will not be asked at this point to make forum non conveniens arguments to demonstrate this is not the appropriate forum for the claim. [20] By way of illustration, it was recognised by the Court of Appeal in Jameel (Yousef) v. Dow Jones Co Inc [21] that, if a given court were considering an application to set aside permission to serve a claim beyond the jurisdiction, there was a need for the claimant to demonstrate a tort that was both ‘real and substantial’ had been committed in the jurisdiction.

However, in the event that a given defendant is not domiciled in a Member State, the English common law has recognised that courts [22] have a broad inherent discretion to decline to assume jurisdiction on the basis of forum non conveniens since another jurisdiction is available for the trial of the claims and that the other jurisdiction is more appropriate. [23] With this in mind, in the event that an English court opts to refuse jurisdiction under the forum non conveniens doctrine and chooses to stay proceedings so that there is a provisional suspension, proceedings can be resumed by a court in the event that it proves the foreign forum has no jurisdiction or the claimant has no access to justice. [24] For example, it was recognised by the European Court of Justice (ECJ) in Owusu v. NB Jackson (trading as Villa Holidays Bal-Inn Villas) & others [25] the Brussels Convention served to prevent a contracting state’s court from declining jurisdiction conferred on it by Article 2 (identical to the Brussels I Regulation). The reason for this is that it was recognised a non-contracting state’s court would be a more appropriate forum even where the jurisdiction of no other contracting state was in issue or the proceedings had no connecting factors to any other state. [26] This was the ECJ’s decision because the requirement imposed by Article 2 is a mandatory rule without any derogation from bringing proceedings in the court of the defendant’s domicile except under the Brussels Convention. Therefore, it was necessary for there to be legal certainty with regard to the forum along with recognition that the doctrine of forum non conveniens’ application would serve to undermine rules of jurisdictions predictability and thus also their consistency. [27]

Part 11 of the CPR 1998 has also recognised a defendant that wants to either dispute the jurisdiction of the court to try the claim or argue the court should not exercise its jurisdiction can make an application to the court for an order declaring it has no such jurisdiction or should not exercise any it has under Rule 11(1) within 14 days of an Acknowledgement of Service (AOS) under Rule 11(4). [28] However, a court is able to declare it has no jurisdiction or not exercise its jurisdiction and may make further order under Rule 11(6) – although not every issue of jurisdiction at this point has to be disposed of but the court could postpone jurisdiction where it is convenient. [29] But it is also to be appreciated that applications that serve to dispute jurisdiction are effectively subject to governance by the general provisions with regard to applications under the CPR 1998 at Part 23. [30] This is because of the fact that applications will usually be decided on the basis of the parties written evidence even though further information, disclosure or examination of a signatory of written evidence could prove to be necessary in the circumstances required. Finally, in the event that the challenge that is instigated is against service out of the particular national jurisdiction, the claimant’s burden of proof is to look to establish their own case. [31]

At the same time, however, there is a need to appreciate that, in the European context, the Rome Regulations [32] have developed because, thanks to the Internet and other technological advancements, it is becoming ever easier to form relations between parties in different countries due to communication infrastructures enhancement bringing about complications in the event of disputes arise. As a consequence, whilst any international legal proceedings can prove expensive and complex because the average consumer’s involvement with, for example, the purchase of a DVD player in England, manufactured in and distributed from Germany, is unlikely to stretch to an in-depth familiarity with the German language, law and legal system choice of law issues are likely to arise. [33] This means consumers at all levels (including retailers) need confidence in the system of redress that has been made available to them [34] to have some idea of the law to apply and the country’s courts any dispute that arises is to be dealt with in.

Arguably, however, the Rome II Regulations [35] have done very little to alter the position domestically regarding issues of private international law. This is because, regarding matters of tort, domestically the rule in Phillips v. Eyre [36] required a local court to refer to both the law of the forum and the lex loci delicti when matters of a foreign nature under consideration [37] had been abandoned. For example, where a personal injury claim arises in more than one country then the governing law under consideration is that of the law where the injury was sustained because, in all other cases, the governing law is that “of the country in which the most significant element … occurred”. [38] . However, this general rule is then subject to an exception that states if it appears that, in connecting a tort with a party in another country, it is considered “more appropriate for the applicable law for determining the issues arising in the case … , the general rule is displaced and the applicable law for determining those issues or that issue (. . .) is the law of that other country”. [39] But, whilst the law may be considered somewhat straightforward regarding matters of private international law, there is a need to also consider how the law has been adapted to deal with advancements in technology like the Internet and its resulting impact upon commercial disputes jurisdiction where they arise.

Brussels I – Is it superior to English traditional rules regarding commercial jurisdiction?

Brussels I established rules for determining the EU Member State’s national court that will have jurisdiction over disputes related to commercial contracts to facilitate judgements’ enforcement between different Member States [40] and determine issues of jurisdiction in disputes between parties from different countries regarding contracts. [41] The main reason for this is both the earlier EEX-Treaty and Brussels I have established all contracting parties can freely choose the jurisdiction in any case and expressly agree upon the court for resolving a particular contractual dispute. [42] This is because, where there is not any express agreement in place between the parties, the general jurisdiction rule provides defendants domiciled in a given EU Member State will be sued in their national courts so an afflicted party can claim redress. However, numerous factors must still be considered to form a deeper understanding of the protective framework Brussels I can provide for consumers to know which jurisdiction their dispute will be dealt with by. [43] Brussels I and the EEX-Treaty include ‘special rules’ applicable to consumer contracts to provide greater protection for the consumer [44] and a ‘consumer’ has been defined as someone looking to bring about the conclusion of a contract for a purpose beyond their trade or profession. [45] This is because, whilst, under Brussels I at Article 15(3), this section of the EEX-Treaty will not be looked upon as being applicable to a transport contract other than one that provides for both travel and accommodation. Moreover, Brussels I at section 4 of Chapter II has sought to redress many of the inequalities arising from consumers and businesses being located in different countries. [46]

Article 16 of Brussels I provides consumers can bring proceedings in the EU Member State’s courts where the other party is resident so consumers have a recognisable choice of forum – although proceedings ‘against’ consumers can only be brought in the Member State where the consumer is domiciled. Therefore, consumers may only depart from the protective rules by entering into a contract after a dispute has arisen or by entering into such an agreement that permits a consumer to bring proceedings in courts other than under section 4 of Brussels I or by entering into a contract if both the consumer and the other contracting party are domiciled or habitually resident in the same Member State and agree to confer jurisdiction on that State’s court where it is not contrary to domestic law. [47] On this basis, ‘consumer contracts’ under the EEX-Treaty have been broadened by Brussels I to positively impact upon issues of jurisdiction regarding contracts resolution with online consumers. But, although the EEX-Treaty defined ‘consumer contracts’ as those implemented for the supply of goods or services where their conclusion in the consumer’s state of domicile was preceded by a ‘specific invitation’ or where the consumer “took the necessary steps” for the agreement’s conclusion, [48] Brussels I has reshaped rules regarding where legal actions against providers of information society services and international business can be brought. [49] Therefore, Brussels I at Article 15(1)(c) was considered important for resolving issues of jurisdiction and related matters of forum shopping to cover new innovations in business including e-commerce so consumers can bring lawsuits regarding contracts executed through the Internet. [50] Moreover, ‘directed activity’s’ inclusion under Brussels I at Article 15 was meant to lead to a further improvement in Internet consumers protection regarding matters of jurisdiction and their resolution regarding the appropriate forum where redress is sought by a consumer. [51]

Brussels I’s development brought the EEX-Treaty’s ‘solicitation requirements’ [52] elimination that previously permitted consumers in EU Member States to bring actions against businesses from other Member State in the jurisdiction of the consumer once the consumer had received a ‘specific invitation’ or the business directed its advertising toward consumer sales. [53] Brussels I then expanded the activity that may lead to ‘personal jurisdiction’ over defendants in actions brought by consumers because the question remains whether ‘directed activity’ is deemed sufficient to protect consumers utilising new forms of technology like the Internet. [54] However, under Article 15(1)(c) of Brussels I this jurisdictional rule only applies where a contract is concluded with someone pursuing “commercial or professional activities” in the consumer’s country or where these activities have been directed to EU Member States. [55] Brussels I also included in ‘consumer contracts’ definition all agreements where a company pursues commercial or professional activities in the Member State of a particular consumer. Therefore, the EEX-Treaty’s provision for a ‘specific invitation’ was replaced by the condition of an “activity directed to the Member State of the consumer”, [56] whilst both the European Council and Commission released a statement regarding distance marketing as with the Internet and other similar technological innovations. [57]

However, a ‘specific invitation’ only arises in the event a website looks to pay specific attention to another EU Member State’s consumers through their conduct. [58] In more contemporary times, however, Brussels I provides the mere fact goods or services are offered online will be considered sufficient to recognise the court’s jurisdiction for consumers. On this basis, Article 15 will be applied to resolve such cases and the company operating the website will then be liable to be sued by a consumer within their EU Member State’s jurisdiction. [59] Therefore, when a business operator has intentionally directed their activity towards a EU Member State and the most effective means for businesses to avoid being sued wherever their websites can be accessed involves including a notice or disclaimer defining their ‘target market(s)’ and/or which recognised orders placed by consumers in other Member States will be refused. [60] But this is not really an absolute resolution of the problems because of the fact that digitised products sale are a lot more complex to provide a restriction of to limit the jurisdiction for disputes to be resolved. [61] Nevertheless, those companies offering goods and services online must now recognise all EU Member States immediate jurisdiction and Brussels I is not really making a discernible contribution to legal certainty.

Article 23 of Brussels I has provided parties can enter into an agreement designating the court to hear proceedings where a dispute arises, whilst Article 23(1) is applicable when at least one party is domiciled in an EU Member State and they have agreed the courts will have jurisdiction. Article 23(3) also includes an exemption where none of the parties are domiciled in the EU so the chosen courts can then determine jurisdiction. [62] However, Article 23(2) is the only rule that explicitly acknowledges electronic contracts that have grown increasingly prominent in more contemporary times. Therefore, whilst jurisdiction clauses must be recognised formally ‘in writing’ or evidenced under the EEX-Treaty at Article 17, Brussels I extended this understanding regarding the resolution of jurisdiction. [63] This is because these clauses are usually prohibited in consumer contracts to determine the forum – except for under Article 17 of Brussels I so a given EU Member State’s courts must determine jurisdiction. [64] For example, under Article 2 of Brussels I, regarding general jurisdiction, someone domiciled in an EU Member State can be sued in that country’s courts. Moreover, whilst Brussels I governed individuals and corporations domicile in an EU Member State, regarding E-Commerce’s value to consumers it is often difficult to determine this even where a plaintiff can discern the defendant and locate their transaction. [65] Therefore, to clarify these issues, Brussels I states at Article 59(1) that for determining whether a party is domiciled in a specific EU Member State, the court with jurisdiction will apply the law there.

Brussels I at Article 60 also provides a company or other legal person is domiciled where it has its (a) statutory seat; (b) central administration; or (c) principal place of business. [66] However, it is also necessary to determine special jurisdiction because Article 5 of Brussels I also established rules by derogating from Article 2 that gave the claimant the chance to proceed against a defendant in an EU Member State where they are not domiciled. [67] Such an understanding is not, however, absolute. This is because