Committee on Legal Affairs' draft report rejects proposed deletion of arbitration exclusion in Brussels Regulation

An update on the European Parliament's Committee on Legal Affairs' draft report on the review of the Brussels Regulation, which rejects the proposal to abolish the arbitration exclusion in the Regulation.

PLC Arbitration

The European Parliament's Committee on Legal Affairs (the Committee) is currently considering the European Commission's report and green paper on the functioning of Council Regulation (EC) No 44/2001 on jurisdiction and the recognition and enforcement of foreign judgments (Brussels Regulation (www.practicallaw.com/2-205-5103)). The Committee has published a draft report on the European Commission's proposals for amendment of the Brussels Regulation, prepared by the Committee's rapporteur, Tadeusz Zwiefka.

The conclusions in the draft report essentially reflect the rapporteur's preliminary findings in his December 2009 working document (discussed in Legal update, Committee on Legal Affairs' working document on Brussels Regulation green paper (www.practicallaw.com/5-501-0497)). The key point of interest from an arbitration point of view is that the draft report strongly opposes the abolition (even partial) of the arbitration exclusion from the scope of the Brussels Regulation. More specifically, it suggests the following:

  • The arbitration exclusion should make clear that judicial procedures ruling on the validity or extent of arbitral competence as a principal issue or as an incidental or preliminary question are excluded from the scope of the Brussels Regulation.

  • The arbitration exclusion should also be clarified to make clear that proceedings brought in breach of arbitration clauses and judgments not given by the competent court holding that arbitration clauses are invalid fall outside the scope of the Brussels Regulation and are therefore not enforceable in other member states.

  • The Brussels Regulation should be amended to provide that a judgment should not be recognised if the court which gave the judgment disregarded the arbitration law of the member state in which enforcement is sought, unless the judgment produces the same result as if the latter's law had been applied.

Amendments to the draft report by other members of the Committee have also been published. Interestingly, one of those amendments effectively proposes the reversal of the ECJ's judgment in Allianz SpA v West Tankers Inc (Case C-185/07) (West Tankers): it advocates a recital to the effect that "the various national devices developed to protect arbitral jurisdiction", including anti-suit injunctions and negative kompetenz-kompetenz (www.practicallaw.com/4-205-6045), must continue to be available and the effect of such procedures must be left to the law of member states, as was the position before the judgment in West Tankers.

The proposal to abolish the arbitration exclusion and bring arbitration-related court proceedings within the scope of the Brussels Regulation has generated heated debate within the arbitration community. The Committee's draft report takes a pragmatic approach to the proposed reform and its views will be welcomed by those who feared that the European Commission's proposals would make EU member states less attractive as seats of arbitration.

For a summary of other jurisdiction-related issues considered in the draft report, see Legal update, Committee on Legal Affairs' draft report on the review of the Brussels Regulation (www.practicallaw.com/4-502-3056).

The draft report is scheduled for adoption in committee on 1 June 2010. We will continue to monitor the position.

Source: European Parliament

 
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