1 Prorogation – Selected Problems

Structure of the seminar Overview of present Article 23 of Brussels I Regulation Selected issues related to Article 23  Personal scope  Substative validity  Relation to lis pendens rule 2

Prorogation of jusrisdiction Expression of party autonomy in the sphere of procedural law Party autonomy in the sphere of procedural law  To determine the way of dispute resolution (court proceedings, arbitration, ADR)  To determine the competent forum (court) for a dispute 3

Article 23 of Brussels I Regulation Grants the parties of a legal relationship a wide freedom to determine for themselves the internationally competent forum for any present or future dispute Recognises the parties´autonomy to dispose over procedural matters Gives this freedom reasonable limits

Article 23 To be valid a jurisdiction agreement must meet the folowing conditions:  The transaction to which the jurisdiction agreement refers must fall within the scope of application of the Regulation  The jurisdiction of a court or courts in a MS must be agreed upon  One of the parties must be domiciled in a MS  The agreement must be concerned with a particular legal relationahip  The agreement must be validly concluded  The agreement must satisfy a specific form

Personal scope of present Article 23 At least one of the parties of the prorogation agreement has domicile in a MS It is irrelevant if the party is later defendant or plaintiff Domicle – Articles 59, 60 Problem: relevant point in time for determination of domicile  Moment of conclusion of the agreement  Moment of institution of the proceedings

Personal scope of present Article 23 Article 23 does not generally apply where two parties domiciled outside the EU choose a court or courts in a Member State (prorogation from outside) Article 23(3) - excludes the possible jurisdiction of courts of other Member States  Substantive and formal validity of the agreement is goverend by national law

Personal scope of present Article 23 Prorogation agreement is concluded in favour of courts of a third state Brussels I Regulation cannot grant jurisdiction to a court of a third state Parties choose the court in the third state, but the defendant has domicile in a MS Is the court of the Member State which has jurisdiction under Article 2 obliged to accept jurisdiction? Or should the court decline the jurisdiction in favour of the chosen court of third state?

Personal scope of present Article 23 Two opinions 1)Provisions of the Regulation are applicable and the courts of the MS have to accept their jurisdiction  Mandatory nature of jurisdiction rules 2)Courts of the MS should decline their jurisdiction  Theory of the reflexive effect (effet reflexe)  Coreck Maritime case

New Article 23 – personal scope Commision´s original proposal - universal personal scope => wider application Proposal in the light of the discussions in the Working Party on Civil Law Matters (Council) – parties one or more of whom is domiciled in a Member State => no change Article 23(3) – deleted => ??? courts of another MS (than the chosen one) can accept the jurisdiction on the basis of a national rule

New Article 23 – relation to third states Not expressly solved Only new lis pendes rule in relation to third states: Where jurisdiction is based on Articles 3 to 7 and where proceedings involving the same cause of action and between the same parties or where proceedings involving related actions are pending before the courts of a third State at the time when a court in a Member State is seised the latter court may upon application by one of the parties stay the proceedings if: it may be expected that the court in the third State will, within a reasonable time, give a judgment capable of recognition and, where applicable, enforcement in that Member State.

New Article 23 – relation to third states Two possible consequences of new lis pendens rule  Exhaustive rule concerning the possibility for a court in the EU to decline its jurisdiction given by the Regulation => the court therefore has no power to give effect to choice of court agreement in favour of third state  Rule of lis pendens can be understood as governing only the situation of parallel proceedings and the Proposal does not address the effect of prorogation agreement in favour of third state

Present Article 23 – substative validity Article 23 now expressly regulates only formal validity (no reference to national law) – Elefanten Schuh case Substantive validity – autonomous or national law? In how far does the Article 23 allow a reference to national law as regards the substantive validity? To which national law one has to refer? Central element of substantive validity = existence of agreement or consent between the parties  Governed autonomously by Article 23?  Estasis Salotti case Other elements of substantive validity (mistake, errror, fraud, threat, duress, capacity of the parties) – applicable national law

New Article 23 – substantive validity Rule on the substantive validity (..) unless the agreement is null and void as to its substantive validity under the law designated by the conflict-of-law rules of that Member State Any change? Any more space for autonomous application of Article 23?

Present Article 23 – relation to lis pendens rule (Article 27) Gasser v MISAT case

New Article 23 – relation to lis pendens New rule in Article 31 (…) Without prejudice to Article 24, where a court of a Member State on which an agreement referred to in Article 23 confers exclusive jurisdiction is seised, any court of other Member States shall stay the proceedings until such time as the court seised under the agreement finds that it has no jurisdiction under the agreement Where the court designated in the agreement has established jurisdiction in accordance with the agreement, any court of other Member States shall decline jurisdiction in favour of that court. Paragraphs 2 and 3 shall not apply to matters governed by Sections 3, 4 and 5 when the policyholder, the insured, the injured party or a beneficiary of the insurance contract, the consumer or the employee is the claimant and the agreement is not valid under those sections.

New Article 23 – relation to lis pendens Chosen court has a priority Increase the effectiveness of prorogation agreements Elemination of dilatory tactics Exemption: insurance, consumer and employment contracts

18 Thank you for your attention PROJECT „THEORY – SKILL – EXPERIENCE“ reg. No. CZ.1.07/2.2.00/ , Operational Program Education for Competitiveness