On 14 December 2010, the European Commission published its proposals for the reform of the Brussels Regulation (see Legal update, Brussels Regulation reforms: European Commission proposes to retain arbitration exception). The proposals include draft amendments to introduce improvements to the interface between the Regulation and arbitration, in particular by retaining the "arbitration exception" and making provision for a stay of court proceedings where the question of arbitral jurisdiction is before either the courts of the seat or an arbitral tribunal.

The Ministry of Justice has published a consultation, Review of the Brussels I Regulation - How should the UK approach the negotiations, seeking views on whether it would be in the UK's national interests to opt in and apply the revised Brussels Regulation in the terms proposed by the Commission.

The consultation sets out the government's preliminary assessment of the key proposals, including that relating to arbitration. It is keen to improve the effectiveness of arbitration agreements within the EU so as to prevent parallel court and arbitration proceedings, and eliminate the incentive for abusive litigation tactics. In its response to the Commission's consultation, the UK suggested that this could be achieved by entirely removing the arbitral process from the scope of the Regulation.

The government is reserving its position on the Commission's proposals until it has had the chance to consult extensively with the arbitration community. One factor which the government will weigh carefully is the extent to which the Commission's proposals could potentially create problems because they are based on the extended scope of EU competence in this area which has resulted from the West Tankers decision.

The consultation poses the following questions:

The deadline for responses is 11 February 2011. The consultation paper notes that it was considered appropriate to abbreviate the consultation period (from the usual recommended 12 weeks) as the UK has to decide whether or not to opt in to the proposal, within three months of publication of the Commission's proposal.