European briefing | To what extent are jurisdictional judgments binding?

The facts in Case C-456/11 Gothaer Allegemeine Versicherung AG were simple enough. Two insurance companies insured some machinery which was to be shipped from Antwerp to Mexico. The bill of lading governing the consignment stipulated that any dispute was to be decided in Iceland, under Icelandic law. It was said that the consignment had been damaged while in transit. The consignor, having presumably been paid under the insurance, assigned its rights against the carrier to the insurers.

They first tried to sue in Belgium. But the Belgian courts held, rationally enough, that they were bound by the jurisdiction agreement in favour of Iceland. They then tried to sue in Germany, where they were met with the argument that the Belgian court’s decision meant that proceedings had to be brought in Iceland. The insurers countered that the Belgian judgment should be recognised, at most, to the extent that it held that Belgian courts did not have jurisdiction; its conclusion that the courts of Iceland had exclusive jurisdiction did not, they suggested, require recognition.

The ECJ had no difficulty – surely correctly – in rejecting a submission that the Belgian judgment was not enforceable because it was interlocutory or procedural. The more interesting and difficult question was how far recognition should extend. After all, strictly speaking, the judgments regulation (Regulation (EC) 44/2001) says nothing about the effect of agreements to confer jurisdiction on non-EU Member States. Could the Belgian judgment not be “recognised” merely negatively (as a recognition that Belgian courts lacked jurisdiction), and not for its positive explanation of why?

The ECJ rejected this contention too. There were two strands to its rejection. First, it reasoned that complete consistency – far from being less important in jurisdictional matters – is in fact especially important there. This, after all, is the whole point of the regulation. Secondly, it pointed out that although Iceland is not a member state of the EU (and therefore not subject to the judgments regulation), it is a party to the Lugano Convention, so that the Belgian judgment did recognise a jurisdictional agreement which an EU instrument specifies as valid.

This seems correct, in principle. Consistent case law of the ECJ emphasizes the importance of uniformity and certainty. It does, however, leave an intriguing question. In this particular case the Belgian court had enforced a clause which an EU instrument (the Lugano Convention) makes enforceable. What if the clause had been in favour of, say, a US court? One part of the ECJ’s logic would seem to support the idea that a judgment designed to “give effect” to such an agreement should be enforced. But the second strand would not. This, rather difficult, question therefore remains open to clarification.

Revised judgments regulation

Meanwhile, time is in any event running out for the judgments regulation in its current form. On 6 December 2012 the Council adopted the recast text of a revised version. As it happens, the revised text does extend the provisions on jurisdictional agreements: they will now apply as a matter of mandatory EU law even where neither party is domiciled in a member state. But they will still only apply to jurisdictional agreements in favour of the courts of a member state, so that the question raised above cannot be said to have been resolved.

What is likely to be of greatest interest to English lawyers in the new regulation (which will apply from some time in 2015) is the reintroduction of a form of discretionary forum non conveniens stay in cases where there is concurrent jurisdiction between the courts of a member state and those of a third state. This is a retreat from the current position, which has been subject to considerable criticism in England. There will not, however, be any change in the basic principle that as between the courts of different member states will be determined strictly according to the principle that the court first seised of a case will have priority.

Limitation periods

In BCL Old Co Ltd v BASF plc [2012] UKSC 45, the Supreme Court was asked to consider whether the limitation period on the right to claim damages before the Competition Tribunal for breach of competition law was consistent with EU law.

The underlying facts are complex, but the essential question was whether it was acceptable to impose a two-year limitation period from the date of the EU decision establishing infringement. It was argued that this infringed EU law because it was insufficiently clear whether the limitation period began when the decision ?on infringement became final, or only when the decision on penalty became final, sometime later.

The Supreme Court unanimously rejected this suggestion. The notion that there could be no limitation unless “any reasonable doubt” about the commencement of the limitation period had been conclusively resolved. This was too stringent a test.
The relevant rules were, the Supreme Court thought, sufficiently clear to meet the requirements for legal certainty. This is sensible. The proposition that rules infringe the principles of legal certainty wherever they require interpretation or their meaning is open to reasonable argument would have unduly unsettled the law.
No doubt there are pathological cases, where the law is so obscure a trap for the unwary that ?the effectiveness of EU law is called into question. But that conclusion is rightly reserved for truly extreme case; and BCL was not such a case.