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On 1st March 2002 the Brussels Regulation (Council Regulation 44/2001) came into force across the EU with the aim of unifying the recognition and enforcement of judgments in civil and commercial matters. With the exception of Denmark, it replaces the earlier Brussels Convention and complements the Lugano Convention (1988), which covers the EFTA states and Poland. Arbitration agreements, bankruptcy and insolvency proceedings are excluded.

The Regulation assists in determining which courts have jurisdiction over disputes when it is not agreed expressly in a contract. The general rule is that the defendant should be sued in his home state subject to a number of exceptions, particularly for consumers.

If the defendant is not domiciled in an EU state then the home state of the claimant has jurisdiction. However, the main thrust of the Regulation is to resolve the problem of which country's courts hear a dispute between litigants in different EU states.

A party may also be sued in the courts of the place of performance of a contract, where goods should have been delivered, or where a tort or delict event occurred. If there are several defendants to a claim, each in a different country, then a choice may be made, as each of the defendants' home courts have jurisdiction; provided that on balance it is expedient to hear the matter in the jurisdiction chosen.

Insurers may be sued in either their own domicile state or by the policyholder in the policyholder's domicile state. The permitted exceptions to this are for insurance contracts covering ships, goods in transit and loss of freight or charter hire. This is consistent with other provisions in the Regulation, which aim to protect consumers. Additionally, such insurance contracts are more likely to have an exclusive jurisdiction clause.

The Regulation also tries to prevent duplication of proceedings. Article 27 confirms that the court first seized of the action has jurisdiction and any other courts must then decline jurisdiction. For a court to be seized the documents must have been lodged and in the process of being served.

Recognition of judgments has been a problem within EU states and the final part of the Regulation calls for a judgment given in a member state to be recognised by the other EU states. The exceptions to this relate to irreconcilability with earlier judgments, public policy, and most importantly default judgments where the defendant was not given sufficient opportunity to arrange a defence.

Finally, a judgment that is enforceable in the issuing state is enforceable in another state only if the claimant applies to that other state's court for a declaration of enforceability. The grounds for the declaration are set out in the Regulation.

Although setting out a clear framework for resolving the jurisdictional problems often encountered in commercial dealings, the Regulation may have the result of forcing claimants into litigation in other EU states when that would not have been their original intention. The best means of avoiding this is to have an express law and jurisdiction clause in a contract, with the result that there is certainty in dispute resolution.

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Gard News is published quarterly by Gard Services AS, Arendal, Norway.