Jurisdiction and governing law

The Regulation

With the Brexit transition period ending in a few weeks, it is an opportune time to provide a refresher on jurisdiction and governing law in civil and commercial matters within the EU.

In this series of articles, we focus on the Brussels Recast Regulation (Council Regulation (EC) No. 1215/2012) (the Regulation), Council Regulation (EC) No. 593/2008 (Rome I) and Council Regulation (EC) No. 864/2007 (Rome II), summarising both the general rules and exceptions.

We start this series with a review of the Regulation.

Jurisdiction

The Regulation is the key European instrument determining jurisdiction in civil and commercial matters within the EU.

To whom does the Regulation apply?

All EU member states except Denmark.

What does the Regulation do?

It contains the rules to determine which EU court has jurisdiction in civil and commercial disputes within the EU.

What are the general provisions?

The general provisions are set out at Section 1 of the Regulation.

General rule

The main principle is that a defendant is sued in the country in which he/she is domiciled, meaning that the courts of the defendant’s EU member state will have jurisdiction to hear the dispute (regardless of nationality) (Article 4).

Exceptions

Article 7 sets out a number of exceptions to the general rule and the main exceptions are:

  • Contract - may be sued in the courts of the place of performance of the obligation.
  • Tort - may be sued in the courts of the place where the harmful event occurred.
  • Civil claim (damages or restitution relating to criminal proceedings) - may be sued in the courts seised of those proceedings.
  • Branch, agency or other establishment dispute - may be sued in the courts of the place where the branch, agency or other establishment is situated.
  • Cargo/freight – may be sued in the court where the cargo or freight has been arrested (or could have been arrested if bail or other surety had not been given).

Article 8 sets out further exceptions to the general rule.

  • Multiple defendants - where there is more than one defendant, persons may be sued in the courts where any one of them is domiciled.
  • Third-party action - as a third party in an action on a warranty or guarantee or in any other third-party proceedings, a person may be sued in the court seised of the original proceedings.
  • Counter-claim - on a counter-claim arising from the same contract or facts on which the original claim was based, a person can be sued in the court in which the original claim is pending.

The Regulation promotes party autonomy and freedom of choice. In addition to the above exceptions, parties can contractually agree jurisdiction regardless of their domicile (Article 25.7).

What are the specific provisions relating to insurance?

Specific provisions relating to insurance are set out at Section 3 of the Regulation.

General rules

The general rule is an insurer domiciled in an EU member state may be sued in the courts of the Member State in which:

  1. The insurer is domiciled.
  2. An action is brought by, and in the domicile of, the claimant policyholder insured or beneficiary.
  3. Proceedings are brought against the leading insurer, if he is a co-insurer.

An insurer not domiciled in an EU member state, can be sued in the State where it has a branch agency or other establishment.

Exceptions

Article 15 sets out specific circumstances where the general rule at Section 3 may be departed from by way of an agreement:

  • Entered into after the dispute has arisen.
  • Which allows the policyholder/insured to bring proceedings in courts other than those indicated in Section 3.
  • Which is concluded between a policyholder and insurer domiciled or resident in the same member state, and it confers jurisdiction on the courts of that member state.
  • Which is concluded with a policyholder not domiciled in a member state.
  • Which relates to a contract of insurance covering one or more risks set out in Article 16 (marine perils, aircraft, offshore installations and large risks under Solvency II).

Brexit

The Withdrawal Agreement provides for the continued application of the Regulation for legal proceedings instituted before the end of the transition period on 31 December 2020.

However, it remains to be seen what the implications of Brexit will be for proceedings having a UK element. We shall provide an update as soon as matters are clarified between the EU and the UK.

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