Brussels and Lugano Conventions: what they are, what they do.

• Author: Powell, John F.

UNDER English law, the jurisdiction of courts traditionally has been based on service of proceedings--that is, the courts will assume jurisdiction when the plaintiff can validly serve a writ on the defendant. Service can be validly effected whenever the defendant is present within the jurisdiction. At common law, the English courts have also assumed jurisdiction when the defendant submits to jurisdiction either by appearing in the proceedings or by agreement under the terms of a contract.

Statutory provisions have extended the courts' powers when the defendant is outside the jurisdiction. In deciding whether to exercise that discretion, the courts are able to take into account a number of considerations, including the appropriateness of England as the forum.(1)

Superimposed on this base of English law and practice are two conventions--the Brussels Convention of the European Community member states, and the Lugano Convention between the EC member states and the European Free Trade Area (EFTA) member states. The effect of the Lugano Convention is to extend the Brussels Convention's provisions to EFTA countries.

Whilst the European Community is now known as the European Union, the term European Union has not simply replaced European Community, and this has led to some uncertainty as to which is the correct term to use in a particular context. Strictly speaking, since the Brussels Convention implements Article 220 of the EC Treaty, it is probably more correct in discussing the convention to refer to the EC rather than the EU, but insisting on this distinction may be needlessly confusing. To avoid this confusion, this article will use the term European Union, or EU for short, although references to the EC will continue to be used, certainly in the context of "EC law."

The 12 European Union states are Belgium, Denmark, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain and the United Kingdom. Negotiations are under way for the admission of Austria, Finland, Sweden and Norway to the EU. Member states of EFTA are Austria, Finaland, Iceland, Lichtenstein, Norway, Sweden and Switzerland.

PURPOSE OF CONVENTIONS

The principal purpose of the conventions is to facilitate the enforcement of judgments among the contracting states, but they also establish detailed provisions to determine jurisdiction. Their effect is to restrict a national court's jurisdiction over parties based in other contracting states and to harmonize the rules in those states. Insofar as the courts of contracting states apply these rules in determining jurisdiction as among themselves, the conventions affect parties based outside the contracting states.

The conventions generally do not overrule any contractual jurisdiction clause, save in these specific circumstances: (1) insurance and consumer contracts; (2) when mandatory jurisdiction is required under Article 16; and (3) when there has been submission to jurisdiction by appearance in proceedings.

HISTORICAL FRAMEWORK

The Brussels or 1968 Convention was signed by the then members of the European Community in 1968 and came into force in 1973. A protocol conferring jurisdiction on the European Court of Justice to interpret the convention was entered into in 1971 and came into force in 1975. In England, statutory effect was given to the convention by the Civil Jurisdiction and Judgment Act 1982.

The Lugano Convention, which is intended to strengthen co-operation between the EC and EFTA, was adopted by the member states of the EC in 1988. In England, the Lugano Convention was ratified in 1991 and came into force in May 1992 by virtue of the Civil Jurisdiction and Judgments Act 1991, amending the 1982 act.

The Lugano Convention is substantially the same as the Brussels Convention, save that the European Court does not have jurisdiction to give preliminary rulings on the interpretation of the Lugano Convention. The second protocol to the Lugano Convention and subsequent declarations provide, in essence, that the courts of the various EFTA states and the European Court will pay due account to the decisions of each other when interpreting the meaning of the conventions.

As of 1994, the Lugano Convention is in force in the following states (in order of ratification): the Netherlands, France, Switzerland, Luxembourg, United Kingdom, Norway, Portugal, Italy, Sweden, Finland and the Republic of Ireland.

Various reports have been produced by the EU in relation to the different conventions, and these reports have been accorded special status in relation to interpretation. Courts may refer to the reports to aid them in interpreting the conventions.(2)

SCOPE OF CONVENTIONS

The conventions apply to "civil and commercial matters." The significance of the term "civil" appears to be a reflection of a distinction drawn in the laws of the original contracting states between "civil" and "public" matters--that is, the activities of public bodies in the exercise of public functions. In the context of the conventions, these terms must be given a meaning in line with the "objectives and schemes" of the conventions, as well as the "general principles which stem from the corpus of national legal systems."(3)

The areas specifically excluded by Article 1(2) from the conventions are of particular note. They are (1) revenue, customs or administrative matters; (2) proceedings relating to the winding-up of insolvent companies, judicial arrangements, compositions and analogous proceeding; and (3) arbitration. The rationale for these exclusions is either that they lie in a grey area between civil/public law or that a disparity existed in the law of the contracting states prior to the 1968 Convention.

The insolvency exclusion applies only to proceedings that derive directly from a bankruptcy or winding-up or that are closely connected with bankruptcy proceedings.(4) As to arbitration, the European Court has held that the conventions exclude arbitration "in its entirety." This extends to proceedings brought before national courts in relation to an arbitration.(5)

The conventions also provide by Article 55 that they supersede existing treaties on recognition and enforcement of judgments insofar as they relate...