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Brussels Convention and English conflict of laws

Title: Making use of relevant case law (where available) explain and discuss how, and to what extent, the old Brussels Convention and the new Council regulation have affected and altered the traditional rules of English conflict of Laws in relation to issues of jurisdiction arising from specific in personal contracts

I. Introduction

When a contract is put under examination by the English Courts (in case that a dispute has arisen regarding its content or its validity), it may be found to contain foreign elements that could be as an example: a) the nationality of one or both of the parties (one of both of them may be foreigners) or b) the construction or the content of the contract may be connected with a number of foreign countries. In such a case the Court must decide on the law governing this ‘international’ contract. The decision for this law (‘proper’ or ‘applicable’ law) belong primarily to the parties who should include in their contract which law they desire to be applied in the case that a dispute appears, i.e. which would be the desired applicable law. It is possible that in the contractual agreement there is no such a provision. In that case the governing law of the contract will be the law of the country with which the ‘contract is most closely connected’ (C.M.V. Clarkson, J. Hill, 2002, 198)

Since the introduction of the Convention of Rome of 1980, the role of the national legislations of the member states on the field of contractual obligations has been limited. Recently, the Rome Convention on the Law Applicable to Contractual Obligations (as it has been constructed under the influence of the ‘old’ Brussels Convention of 1968) has become the basic legislation that is applied in this area replacing the traditional rules of English common law. The above Convention applies according to the article 1 (1) to the contractual obligations that involve a ‘choice of laws between different countries’.

Besides to the above legislation, as it is applied in the United Kingdom, there are two other ‘legislative tools’ that refer specifically to the definition of jurisdiction in disputes concerning Civil and Commercial matters. The first one is the 1968 Brussels Convention (as it is mentioned above) on Jurisdiction and the Enforcement of Judgments in Civil and Commercial matters and the second is the EU Council Regulation No 44/2001 on Jurisdiction and the Recognition and enforcement of judgments in Civil and Commercial matters.

Under the above rules, this paper examines the influence that the Brussels Convention and the 44/2001 Council Regulation have to the traditional rules of English conflict of laws with particular reference to the problems that tend to appear regarding the choice of jurisdiction for the disputes concerning personal contracts. The presentation of the theories that have been stated regarding the above issue has been backed by relevant case law wherever this was available.

II. Personal contracts with international character as they are treated by the traditional rules of English conflict of laws

a. Defining the conflict of Laws in accordance with the British legal rules

The conflict of laws has been recognized as a ‘part of the private law of a particular country which deals with cases having a foreign element’ (J.H.C. Morris, D. McClean, 2000, 2). Another term for the conflict of laws could be the ‘private international law’. Under the scope of the English rules of conflict of laws, the term ‘foreign element’ (as part of the above definition) means that there is a relation with the law system, which is different from that of the ‘forum’. As examples of such ‘foreign elements’ Morris and McClean (2000, 2) mention the following ‘facts’ (regarding especially the area of contracts): a contract was made with a foreigner or was to be performed in a foreign country, or one of the parties is not English’. Of particular importance is the fact that the rules of the conflict of laws that are currently applied in England are not similar with the relevant rules of any other country (primarily because of the difference of the practices and theory of common law from that of the civil law and also because of the changes that the rules of common law have suffered amongst the countries where the latter is applied).

b. Determining the jurisdiction for a dispute that arises on a contractual agreement by reference to the English rules of conflict of Laws

First of all we should make the distinction between the ‘forum’ (which is the place – country – where the dispute is going to be resolved (either by litigation or arbitration) and the applicable law (which is the law that defines the rights and the obligations of the parties in relevance with their contract)[1]. Under the rules of the common law, the parties can choice the applicable law that would prefer to govern their contractual agreement by including in the above agreement a clause about the desired place of litigation or arbitration[2] (i.e. a clause that express a preference for the courts of a specific country)[3]. With this clause the parties state their desired country regarding the resolution of a dispute that will possible arise from the contract[4], defining at the same time the law of which country they would prefer to be the governing law of their contractual agreement[5].

On the other hand, the fact that the governing law of a contract is that of a specific country this does not automatically excludes the courts of another country from the right to hear the disputes that will arise regarding this contract (where such a right is justified according to the relevant rules of the Brussels Convention). In case of Bryant v. Foreign & Commonwealth Office, the employee issued a complaint in an employment tribunal alleging unfair dismissal and – at a first level – the tribunal held that it didn’t have jurisdiction to hear the complaints. The Employment Appeal Tribunal, which followed, stated that although the Italian Law was the governing law of the contract, there was nothing that could prevent the hearing of the case in the UK in accordance with the rules contained in the Brussels Convention and it decided that the matter should be allowed to continue in the employment tribunal.

We have to notice here that the jurisdiction of the English courts is in any case decided when a relation can be assumed between an existing contract and the territorial rights as they have been described in the relevant English laws or the Brussels Convention. In the occasion that such a relation cannot be proved, the English courts have the right to refuse the hearing of a case that refers to a contractual dispute. In case of Jackson v. Ghost Ltd and Ghost Inc, the Employment Appeal Tribunal found that there were ‘no signs of connection between Ms Jackson’s employment, performed exclusively in the US (following recruitment in that country) for a US corporation and the UK such as to afford the employment tribunal jurisdiction to entertain her complaints’.

c. Interaction between the English rules on conflict of laws – the Brussels Convention of 1968 and the EU Council Regulation no 44/2001

The traditional English rules of private international law that regulate the dispute resolution of international contractual agreements (and in this aspect also the choice of the appropriate jurisdiction) have been replaced, as it was stated before, by the orders of the Rome Convention of 1980 which provides rules of international private law that are applied in all the member states. We have to mention that this application of the Rome Convention comes into discussion only when the parties have not already stated in their contractual agreement, which will be the governing law of the specific contract (the declaration of the applicable law is usually made through a statement about the courts that will have the right to resolve a dispute[6] that may arise from the contract). To this extension, we can say that the English rules are still applied in the dispute resolution of contractual agreements – even the international ones – but with the specific mention of their power in the contract.

Under the above analysis, the problem seems to arise when there is no special provision in a contractual agreement as to which is the applicable law[7]. On this problem the Rome Convention (as it has been enforced over the traditional English rules) provides a solution with the article 4, according to which the applicable law will be that of the country with which the disputed matter has the closest connection. The above matter is handled in a different way by the Brussels Convention which (in article 2) provides that the ‘plaintiff is to sue the defendant before the courts of the defendant’s domicile or (if the defendant is a legal person) the courts for its seat, provided that the defendant is domiciled or has its seat in a contracting State’. Moreover, in the article 5 of the same Convention – and just for a series of special matters[8] - it is stated that ‘the courts of the place of performance of the obligation in question have additional jurisdiction’. As G. C. Moss (2000, 390) stated, the aim of both the Conventions is to make the applicable law predictable. In any case, before the court is involved in the dispute, it is absolutely necessary that the applicable law be defined. Regarding the scheme of Council Regulation 44/2001, this is expressed by the statement that if the courts of two or more countries have jurisdiction under rules in Regulation, then the courts first seized of the action have exclusive jurisdiction.

The choice of the governing law and the applied jurisdiction belongs, as it has already described, in the parties. However, in the occasion of the absence of a specific agreement the decision belongs to the court, which will examine the issue regarding the provisions of the above Conventions. In the case of EWCA Civ 1880 (19/12/2002), the Court decided that the jurisdiction should be defined according to the article 2 and not the article 13 of the Brussels Convention the requirements of which were not considered as having been completed in this specific case. On the other hand, in the case of Waldwiese Sftung and another v. Lewis (2004), the court decided that the jurisdiction – because of the absence of relevant agreement between the parties – should be defined in accordance with the article 4 of Rome Convention.

Conclusion

The current relation between the traditional English rules of the conflict of laws with those that are concluded in the above mentioned Conventions seems to be in a transitive period. The English laws continue to regulate and supervise the whole contractual agreement to the extent that all the provisions about this agreement have been defined in its text. In the occasion that a dispute arise and there is no previous agreement between the parties for its resolution, then it’s in the power of the general rules of the Conventions to resolve the issue. As for the choice of the most appropriate legislative vehicle on such an occasion, the decision belongs to the court in front of which the dispute has brought for resolution.

References

A. Books and Journals

Atrill, S, ‘Choice of Law in Contract: The missing pieces of the article 4 Jigsaw?’, International and Comparative Law Quarterly, July 2004, 53.3(549)

Berger, K. P., ‘Harmonisation of European Contract Law – The influence of comparative law’, International and Comparative Law Quarterly, October 2001, 50.4(877)

Clarkson, C. M. V., Hill, J., Jaffey on the Conflict of Laws, 2002

Hill, J. ‘Choice of Law under the Rome Convention: The approach of the UK courts’, International and Comparative Law Quarterly, April 2004, 53.2(325)

Insurance Law Monthly, ‘Conflict of Laws’, January 2004, 16.1(5)

Labor Law Journal, ‘Arbitration, February 1956, 118-120

McClean, D., The Conflict of Laws by Morris, 2000

Moss, G. C., ‘Performance of Obligations as the Basis of Jurisdiction and Choice of Law (Lugano and Brussels Conventions Article 5 (1)), Nordic Journal of International Law, 2000 68 (379-396)

Stone, P., The conflict of Laws, 1995

Vasiljeva, K., ‘1968 Brussels Convention and EU Council Regulation no 44/2001: Jurisdiction in Consumer contracts concluded online’, European Law Journal, vol. 10, no. 1, January 2004, 123-142

B. Cases

Bryant v. Foreign & Commonwealth Office, Employment Appeal Tribunal, (2003)

Jackson v. Ghost Ltd and Ghost Inc, Employment Appeal Tribunal, (2003)

Kastner v. Jason and others, Court of Appeal (Civil Division), (2004)

Rayner v. Davies, Court of Appeal, (Civil Division), (2002)

Waldwiese Sftung and another v. Lewis, Chancery Division, (2004)

1


Footnotes

[1] See also C.M.V. Clarkson, J. Hill, 2002, 206

[2] In the case of Kastner v. Jason and others (2004) the judge held that in absence of a parties’ agreement to confer to the English courts power of arbitration regarding a contractual agreement, ‘there would be no jurisdiction in an arbitration held under English law for the arbitrators to make a freezing order at an interim stage prior to a final award’.

[3] S. Atrill states that it is primarily accepted that there may be several jurisdictions that could be regarded as eligible but there are mechanisms that ensure that finally only one of the above jurisdictions will be selected. Under these circumstances the existence of conflicting findings of liability can be avoided by the parties by selecting a single governing law (S. Atrill, 2004, 6)

[4] Where there is no provision in the contract prohibiting a specific action to either of the parties, no dispute can be arisen in case that such an action takes place by one of the parties despite the fact that the other party is against this action. In this occasion, there is no basis for arbitration (Labour Law Journal, Feb 1956, 120)

[5] According to J. Hill (2004, 20), it seems from the practice that the English courts will ‘conclude that the parties have chosen English law to govern their contract if, in that contract, they have chosen either English jurisdiction or arbitration in England’

[6] The problem that sometimes occur regarding the ‘jurisdiction clause’ is whether this is valid or not to the extension that this concern can create further problems to the definition of the applicable law. The case of Andrew Smith J in Evialis SA v SIAT, 2003, as it is presented in the Insurance Law Monthly, examines the above specific problem.

[7] As K. P. Berger states (2001, 12), in the borders of the European Community, a suggestion has been made to amend the Rome Convention 1980 on the law applicable to Contractual Relations so as to allow the parties to choose the Principles of European Contract Law as the law governing their contract, not only before arbitral tribunals, but also before domestic courts.

[8] The Brussels Convention and the EU Council Regulation no 44/2001 contain specific rules regarding a series of matters, like the consumer contracts (see also Vasiljeva, K., 2004, 124-125)


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