Alongside a detailed staff working document, the European Commission has released its report (the Report) assessing the implementation of the Brussels I bis Regulation (Regulation (EU) No 1215/2012, hereafter: the Regulation). This publication represents a milestone in relation to the possible revision of the Regulation.

The Regulation sets uniform rules on jurisdiction and enables recognition and enforcement of civil judgments across EU Member States.

The Report was drawn up in accordance with Article 79 of the Regulation and provides an overall assessment of the application of the Regulation and its challenges. The case law of the Court of Justice of the European Union (CJEU) constituted the key source of information for the conclusions drawn in the Report. Although according to the Report the Regulation is generally regarded as a highly successful instrument, on some specific issues clarification by the legislator might be warranted. In this blog, we will highlight some of the key issues raised in the Report.

Scope of the Regulation and special rules on Jurisdiction

As specifically required in Article 79 of the Regulation, the Report discusses the possible extension of the jurisdiction rules of the Regulation to proceedings brought against defendants domiciled outside the EU. According to the Report, the current situation – where the Regulation solely applies to proceedings brought against defendants domiciled in the EU – creates an unequal access to justice and an unequal playing field depending on domicile. The status quo also seems to have a negative impact on business and human rights litigation. The European Commission therefore states that a future review of the Regulation could further look into this matter.

Jurisdiction rules in matters relating to contracts and torts

The Report states that numerous referrals from national courts to the CJEU reveal several major issues related to the special jurisdiction rules laid down in Article 7(1) and 7(2) of the Regulation. These provisions govern jurisdiction in matters relating to contracts and torts respectively. The issues are identified in the Report as follows:

  • An increasingly broad interpretation of the scope of ‘matters relating to a contract’: the expansive interpretation of this concept by the CJEU may cause legal uncertainty, especially for third parties not directly involved in the contractual relationship;
  • Determination of the place of performance of contractual obligations: identifying the place of performance remains complex, particularly for contracts involving multiple obligations or digital services, due to the fragmented structure of Article 7(1) of the Regulation;
  • Determination of the place of damage in cases of pure financial loss: the case-law on financial loss has not provided sufficient clarity on which connecting factor should establish jurisdiction, resulting in legal uncertainty and fragmented national practices;
  • The application of the ‘mosaic’ principle in cases involving the violation of privacy rights: the mosaic approach leads to a multiplication of fora and is criticised because it undermines predictability and enables abusive litigation. This is especially problematic in the context of strategic lawsuits against public participation (so-called ‘SLAPPs’), where the wide choice of jurisdictions may be exploited to harass or silence public participation.

The Report suggests that a future review of the Regulation could consider ways to simplify and modernize Article 7(1) and 7(2) of the Regulation.

Jurisdiction rule in case of multiple defendants (anchor defendant rule)

From the staff working document it follows that in relation to Article 8 of the Regulation no review of the Regulation is deemed necessary. The current rules enable the concentration of proceedings with multiple defendants at the domicile of one of the defendants (the so-called anchor defendant). The case law study shows that national courts face some difficulties when applying the ‘connectedness requirement’ in Article 8(1) of the Regulation. The CJEU has already provided some clarification of the ‘connectedness requirement’ in the context of competition cases.

The CJEU clarified that a parent company and its subsidiary can be jointly sued at the place where one of them is domiciled if the parent company exercises decisive influence on the economic activity of the subsidiary. Some referrals from Dutch courts are still pending. These referrals show that it remains difficult to establish close connection in certain cases. Moreover, the referrals also reveal that the predictability of jurisdiction in competition cases is a matter of concern. It is expected that the CJEU will provide further clarity on these matters.

Article 8 of the Regulation, however, does not apply if one of the defendants is domiciled outside the EU. This means that if the national rules do not allow concentration of proceedings there could be two parallel cases, one against the parent company in the EU and the other one against the subsidiary in the third country, with the risk of having irreconcilable judgments. As stated above, a possible future review of the Regulation could further look into the matter of extending the jurisdictional rules to include disputes involving defendants domiciled outside the EU.

Jurisdiction rules for collective redress

The Report highlights that the Regulation lacks specific jurisdictional rules for collective redress, creating practical obstacles such as fragmented litigation and increased burdens for plaintiffs who must often file court proceedings in multiple courts, which can lead to irreconcilable judgments.

A future review could consider whether the Regulation governs jurisdiction in collective (consumer) claims in a satisfactory manner.

Further analysis is needed in order to decide whether the necessary procedural tools to cover collective redress, could be further enhanced through legislative intervention.

No exequatur and application of refusal grounds for recognition and enforcement of foreign judgments

The Report concludes that the system of recognition and enforcement functions well overall, particularly due to the abolition of the need for a formal procedure to declare a foreign judgment enforceable in another jurisdiction (exequatur). This abolition has reduced costs and court workload.

Article 45 of the Regulation lists a number of grounds that can lead to the refusal of recognition and enforcement. These grounds range from breach of public policy in the addressed member state, to proper service of process to the defaulting defendant and irreconcilability with other judgments.

Article 45(1), points (c) and (d) contain two grounds of refusal that refer to an irreconcilable judgment between the same parties in the member state addressed (point (c)), or to an earlier judgment between the same parties and on the same cause of action given in another member state or in a third state (point (d)).

While some national variations exist, especially in the interpretation of the refusal grounds under Article 45 of the Regulation, according to the Report, these do not significantly affect the system’s overall effectiveness. A possible future review could focus on technical clarifications. Especially regarding the consistency between the refusal grounds under point c and d and the lis pendens rules regarding conflicting judgments between the same parties.

What is next?

The Regulation has generally achieved its objectives, but certain areas may benefit from extension, clarification or simplification of the Regulation.

Based on the findings of the Report, the European Commission will initiate a formal review of the Regulation to assess whether legislative amendments are necessary and appropriate.

Our firm is closely monitoring the developments relevant for cross-border litigation and other issues revolving around private international law matters. Want to learn more? Please feel free to contact one of our colleagues listed below.