Lis pendens rule and choice of court agreements

The formalism of the lis pendens doctrine under the previous Regulation[1]  in the context of choice of court agreements allowed the possibility of ‘torpedo’ proceedings. [2] The lis pendens rule states that the court seized second will be obliged to stay the proceedings until the first court establishes whether it has jurisdiction.[3] In such a case, should a designated court be seized second, it had to wait until the court first seized established or declines jurisdiction.[4] This undermined the effectiveness of choice-of court agreements, which could be disregarded by a party acting in bad faith by taking advantage of the so-called ‘Italian torpedo’ action.[5]

The ‘Italian torpedo’ is a situation where an individual to a dispute intentionally brings forth an action before a court in a jurisdiction which is notoriously slow[6] in order to bar unwanted court action.[7] As Alavi[8] argues, this only negates the effectiveness of party autonomy[9] and the purpose of having exclusive jurisdiction.[10] In respect to lis pendes,[11] this helped ensure that there was effective legal protection as it aimed to prevent parallel proceedings and irreconcilable judgements.[12]

The lis pendens doctrine rule was established in Gasser vs MISAT[13] which was met with a lot of criticism and instigated the reform.[14] In this case it was held that the lis pendens rule shall be interpreted by of concluding that any court subsequently seized, even if it happens to be the one indicated in the valid choice-of-court agreement, shall stay the proceedings until the court first seized establishes whether or to it has jurisdiction. The ECJ also expressly stated that this rule cannot be derogated from for the sole reason that the court system of the court first seized is excessively slow. A similar reasoning was followed in the Websense vs ITWAY[15] case. In 2009, the European Commission expressed its concerns that this provision had led to delays, increase in costs and a race to the courts prematurely to ensure their choice of court agreements were effective. [16] Ratković[17] argues, the Gasser judgment is thought to support bad faith litigation and delaying tactics.[18]

[1] Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, Article 27

[2] Mary Keyes & Brooke Adele Marshall, ‘Jurisdiction agreements: exclusive, optional and asymmetrical’ Journal of Private International Law 345

[3] This concerned also those proceedings that were wrongfully initiated in a non-designated court regardless of the existence of a choice-of-court agreement between the parties to a dispute

[4] Trevor Hartley, ‘Choice-of-Court Agreements and the New Brussels I Regulation” (2013) Law Quarterly Review 309

[5] Mary Keyes & Brooke Adele Marshall, ‘Jurisdiction agreements: exclusive, optional and asymmetrical’ Journal of Private International Law 345

[6] Council Regulation (EC) No 44/2001 of 22 December 2000 on abogados de accidentes de carro jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, Article 21

[7] Hamed Alavi, ‘A step forward in the harmonisation of European jurisdiction: Regulation Brussels I Recast’ (2015) Baltic Journal of Law and Politics 159

[8] ibid

[9] Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, Article 23 – this allowed parties to agree on their own rules so long that they did not conflict with the laws in force in their chosen member states.

[10] ibid

[11] ibid, Article 29

[12] Hamed Alavi, ‘A step forward in the harmonisation of European jurisdiction: Regulation Brussels I Recast’ (2015) Baltic Journal of Law and Politics 159

[13] Erich Gasser GmbH v. MISAT Srl, European Court of Justice (2003, C-116/02)

[14] Ian Bergson, ‘The death of the torpedo action? The practical operation of the Recast’s reforms to enhance the protection for exclusive jurisdiction agreements within the European Union’ (2015) Journal of Private International Law 1

[15] Websense International Technology Limited v. ITWAY Spa, Irish Supreme Court (2014, IESC 5)

[16] Ian Bergson, ‘The death of the torpedo action? The practical operation of the Recast’s reforms to enhance the protection for exclusive jurisdiction agreements within the European Union’ (2015) Journal of Private International Law 1

[17] Tena Ratković & Dora Zgrabljić Rotar, ‘Choice-of-Court Agreements

under the Brussels I Regulation (Recast)’ (2013) Journal of Private International Law 245-268

[18] ibid