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Brussels Regulation

Introduction

Legal action is usually a last resort in civil and commercial disputes, particularly in cross border consumer cases. The Government is committed to promoting low cost, user friendly alternatives to court action. It is actively supporting initiatives to develop cross border alternative dispute resolution (ADR) schemes, such as ombudsmen and arbitration. It believes ADR can contribute to consumer confidence in the EU single market and in electronic commerce.
 
Nevertheless with the growth of cross border shopping, particularly over the internet, traders and consumers may be involved in contractual disputes. A court faced with such a case must decide if it has jurisdiction.
 
In 2000, the EU adopted Council Regulation (EC) No 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial disputes, known as the Brussels Regulation. The EU rules are set out in the Civil Jurisdiction and Judgments Order 2001, which came into force on 1 March 2002 (SI 2001 No. 3929). 
 
The Brussels Regulation replaced and modified the 1968 Brussels Convention (implemented in UK law through the Civil Jurisdiction and Judgments Act 1982). The countries covered by it are all the EU Member States except Denmark.  Switzerland, Iceland and Norway apply the rules of the 1988 Lugano Convention, which is similar to the Brussels Convention. Because it opted out of the Brussels Regulation, Denmark continues to follow the rules of the Brussels Convention.
 
This note explains the general rules and consumer provisions of the Brussels Regulation, as put into law through the Civil Jurisdiction and Judgments Order.  This guidance has no legal force.  It is intended to help people understand the rules.  The courts might not construe the legislation in the way interpreted here. Those concerned about jurisdiction and applicable law should refer to the legislation for a full statement of the legal position and in case of doubt should seek legal advice. 
 
At the end of these pages is a list of frequently asked questions that addresses some issues about sales to consumers.

Summary

•  As with any question about jurisdiction or applicable law and possible legal action, you may need to seek legal advice or consult a solicitor. In England and Wales you can contact Community Legal Service Direct (www.clsdirect.org.uk);

•  if you sell to consumers in other EU states (except Denmark) and your website is geared to doing so, Article 15 of the Brussels Regulation is likely to apply in the event of a contractual dispute;

•  your website might be seen as being directed to other states if, for example, it: offers a choice of the languages or currencies of those states, or gives product specifications or delivery times or  prices for them;

•  in the event of a dispute, a consumer in another EU or EFTA country  would probably have the right to take legal action in his or her home court. Any judgment given there would be enforceable in the UK;

•  if you are only intending to sell in the UK and your website reflects this, you are less likely to be sued in another EU or EFTA country;

•  except in the case of consumer contracts, you are unlikely to be sued in another EU or EFTA country if your standard contract says that in the event of any dispute the English (or Scots or Northern Ireland) courts will have jurisdiction.

Also remember:

•  there are many other ways of resolving disputes: e.g.

- through discussion and negotiation with the consumer
- through alternative dispute resolution.

•  consider subscribing to a trade association, on-line code of practice or other arrangement which gives access to an alternative dispute resolution (ADR) scheme, such as an ombudsman or arbitration scheme.

Scope of the Civil Jurisdiction and Judgments Order

1.1 The rules set out in the Order deal with jurisdiction in civil and commercial disputes between litigants and provides for the recognition and enforcement, in the courts of one EU Member State (except Denmark), of judgments given in the courts of another State.  The rules are similar in cases between the three UK jurisdictions.

1.2 The Order deals with rules on jurisdiction in civil and commercial disputes, such as where one party sues another for failure to deliver under a contract.  These rules do not apply to revenue, customs or administrative matters.  Nor do they apply to certain types of civil case, including insolvency.

1.3 The Order does not concern which country's law applies to the substance of a dispute.  In the case of contractual disputes, this is the subject of the 1980 Rome Convention (Implemented in UK law through the Contracts (Applicable Law) Act 1990). 

1.4 The rules in the Order are most likely to come into play in the commercial field, in disputes between businesses. They apply equally, however, to consumer contracts, and contain special provisions about them. This note concerns the consumer provisions. The Lord Chancellor is the Minister responsible for the Convention as a whole. The Scottish Minister for Justice is responsible in Scotland and the First Minister is responsible in Northern Ireland.

General rules

1.5 The general rules in the Civil Jurisdiction and Judgments Act 1982 are unchanged.  Article 2 of the Brussels Convention, which is Schedule 1 to the Act,  sets this rule:
Subject to the provisions of this Convention, persons domiciled in a Contracting State shall, whatever their nationality, be sued in the courts of that State.
1.6 This means that an individual (including a sole trader or a partner in a business sued on his own) can be sued where his principal residence is.  Article 60 provides that the domicile of a company or other association (including a partnership) is where it has its statutory seat (ie, its registered office), its central administration or its principal place of business. 

Rules about contracts

1.7 Article 5.1 and 5.5 of the Brussels Convention, which set additional rules for all contract cases, are also unchanged. They say that:

A person domiciled in a Contracting State may, in another Contracting State, be sued:
1. (a)  in matters relating to contract, in the courts for the place of performance of the obligation in question …

5. as regards a dispute arising out of the operations of a branch, agency or other establishment, in the courts for the place in which the branch, agency or other establishment is situated…

1.8 Paragraph 1(a) means, for example, that a case could be heard in the country where a loan was to be repaid.  Article 23 of the Convention provides, however, that the parties to a contract are free to agree to depart from the above provisions of Article 5. This could be done through a clause in the trader's standard contract saying that in the event of any dispute the English courts (or the Scots or Northern Ireland or the courts of any other country in the world) will have jurisdiction.  A clause like that, however, could not override the rights that articles 15-17 of the Brussels Regulation give consumers.

Consumer provisions: Articles 15-17 of the Brussels Regulation

1.9 Articles 15-17 of the Regulation confer additional jurisdiction over a contractual dispute between a consumer and a business on the courts of the consumer's country of domicile when certain tests are met. These articles replace articles 13-15 of the Convention and make certain changes. Article 15 says:

1. In matters relating to a contract concluded by a person, the consumer, for a purpose which can be regarded as being outside his trade or profession, jurisdiction shall be determined by this Section, without prejudice to Article 4 and point 5 of Article 5, if:

(a)  it is a contract for the sale of goods on instalment credit terms; or
(b)  it is a contract for a loan repayable by instalments, or for any other form of credit, made to finance the sale of goods; or
(c)  in all other cases, the contract has been concluded with a person who pursues commercial or professional activities in the Member State of the consumer's domicile or, by any means, directs such activities to that Member State or to several States including that Member State, and the contract falls within the scope of such activities.

2. Where a consumer enters into a contract with a party who is not domiciled in the Member State but has a branch, agency or other establishment in one of the Member States, that party shall, in disputes arising out of the operations of the branch, agency or establishment, be deemed to be domiciled in that State.

3. This Section shall not apply to a contract of transport other than a contract which, for an inclusive price, provides for a combination of travel and accommodation.
(Note: there are separate provisions on insurance contracts in articles 8-14.)

1.10 The rationale for special consumer rules is that the consumer is usually the weaker party, especially if he or she has paid in advance.  The consumer rules do not prevent a consumer from suing under Article 2 or 5 should he or she prefers. Under Article 16, proceedings may only be brought against consumers in the courts of the Member State where the consumer is domiciled.

1.11 Article 17 of the Regulation prevents the parties to a consumer contract from agreeing to depart from the above provisions before a dispute has arisen.  For example, a business could not enforce a contractual term in which the consumer waived the right to sue in his or her own country's courts in the event of a dispute.

1.12 Article 15.1(c) of the Brussels Regulation makes two changes to the analogous rule in Article 13(3) of the Convention:

• the Convention says that the consumer may bring proceedings in his own court against a trader if "in the state of the consumer's domicile the conclusion of the contract was preceded by a specific invitation addressed to him or by advertising", while the Regulation says that the consumer may sue at home if the trader "pursues commercial … activities in the Member State of the consumer's domicile or, by any means, directs such activities to that Member State …";

• the Convention says that the consumer must also have taken the steps to conclude the contract while in his home state; the Regulation omits this requirement.

The following paragraphs address these points in turn.

Internet websites: interpretation of "directs such activities to that Member State or to several States"

1.13 Article 15.1(c) raises a question about when an internet website would be said to be directed to one or more Member States. There are no detailed rules and no case law. The Council and the Commission issued a joint statement  which covers Article 15, but it is of limited use in interpreting the provision.  Ultimately it would be for the European Court of Justice to decide what constituted directed activities.  We offer the following general guidance.

1.14 The Commission's original proposal of September 1999 included a recital, no. 13, saying that:
electronic commerce in goods or services by a means accessible in another Member State constitutes an activity directed to that State.

1.15 The UK successfully opposed this on the grounds that, compared to the 1968 Brussels Convention, it widened markedly the scope for traders to be sued in foreign courts.  While this has not been tested in the courts, we believe that in the version in which the Regulation was finally adopted, mere accessibility should not be enough to bring a transaction stemming from a website within the scope of Article 15.

1.16 We believe that:

• it would be necessary to look at the nature of any given website;

• websites giving information in different Community languages and currencies and offering to deliver to EU countries might well be covered by Article 15;

• some websites (e.g. a site in English with prices in pounds and confining orders to UK customers) might be hard to describe as directed anywhere but the UK.
Contracts entered into by consumers when they are outside their country of domicile.

1.17 The removal of the requirement that the consumer must have taken the steps to conclude the contract while in his country of domicile (paragraph 1.12, second bullet) extends the protection of the consumer provisions of the Regulation in certain cases. For example, a UK consumer who buys goods while on holiday in France would be able to sue in the UK court if the trader (who would not necessarily be French) had pursued or by any means directed his activities to the UK.