Exception to the Arbitration Exception: the 1896/2006 Regulation
It is hardly necessary to remind readers of this blog that the Brussels I Regulation contains an Arbitration Exception. It is pretty difficult not to have heard of, or read about, the West Tankers litigation lately.
Of course, the Arbitration Exception is not peculiar to the Brussels I Regulation. It is of general application in European civil procedure. All regulations in the field include the same exception. All? Well, not really. There is an exception to the exception.
Regulation 1896/2006 creating a European Order for Payment Procedure does not keep the Arbitration Exception. In the most usual way, article 2 of Regulation 1896/2006 defines the scope of the regulation, first by stating that it applies to civil and commercial matters, and then by excluding certain fields. As could be expected, social security or bankruptcy appear, but not arbitration (and not status and legal capacity of natural persons either, actually).
So it seems that Regulation 1896/2006 does apply to arbitration. Is it a new direction for European civil procedure? That prospect might make some people happy in Heidelberg, but we are not quite there yet. Regulation 861/2007 Establishing a European Small Claims Procedure (article 2) reincludes the Arbitration Exception.
This remarkable exception to the exception beggs two questions:
First, why? What are the reasons which led the drafters of the regulation to delete the Arbitration Exception? Are there any?
Second, what are the consequences? At first sight, not many. After all, if there is an arbitration agreement, courts will lack jurisdiction to do anything, or almost. And when courts will be petitioned to help constituting an arbitral tribunal, it will be hard to use the European Order for Payment Procedure in any meaningful way. But the issue of the availability of the European remedy in aid of the arbitral proceedings may well arise.
And if it does, a second issue will arise, as discussions in a recent conference at the Academy of European Law (ERA) on Cross-Border Enforcement in European Civil Procedure have shown. It will be necessary to coordinate with the Brussels I Regulation, which governs the jurisdiction of European courts granting European Orders for Payment.
I think the answer to the question can be derived from the way the European Order for Payment Procedure under Regulation 1896/2006 (hereinafter the “Regulation”) functions:
In all cases it is generally not the claimant seeking judicial help from the state courts who invokes the existence of a valid arbitration agreement in his application, but the defendant will raise the “arbitral objection” against the claim; only in very rare cases the claimant himself will undermine his claim by mentioning an existing and valid arbitration agreement.
Since the Regulation creates an “unilateral procedure”, a European Order for Payment will be issued on the basis of the facts mentioned in the application only and the court will usually be in no position to gain knowledge of an existing arbitral agreement. If the defendant silently accepts the European Order for Payment by not lodging an opposition under art. 16, the principle “volenti non fit iniura” applies on just basis.
On the other hand, the defendant has the unconditional right to lodge an opposition pursuant to art. 16. If he decides to do so, then the procedure under the Regulation is terminated and the further proceedings will be governed by the Bruxelles I-Regulation – and the relevant Arbitration Exception of the Bruxelles I-Regulation will be applied in due course.
It should be kept in mind that the Arbitration Exception is also not to be found in the European Regulations governing international judicial assistance, that is in Art. 1 of the Evidence Regulation No. 1206/2001 and in Art. 1 of the new Service Regulation No. 1393/2007. Therefore, it would be far off the mark to claim the Arbitration Exception as a general principle of European Civil Procedure (cf. Knöfel, in: Reinhold Geimer/Rolf A. Schütze [eds.], Der internationale Rechtsverkehr in Zivil- und Handelssachen, looseleaf Munich 1973 et sequ., Art. 1 Evidence Regulation note 8 [2007]). For this reason, the mechanisms of European Civil Procedure must generally be made available to arbitration proceedings, at least to keep up with fresh US judicature which generously allows judicial assistance to international arbitral tribunals (with respect to the “Oxus Gold” and “Roz Trading” cases, see Knöfel, RIW 2007, p. 832 et sequ.).
Thanks for your comment.
It is not because European remedies would not be available that courts of the Member states would be unable to offer judicial assistance to parties involved in international arbitrations. Judicial assistance afforded under the domestic law of Member states would remain, and arguably, it was specifically designed for that purpose.
When you say that European civil procedure must “generally” be made available, do you mean that the European Enforcement Order, for instance, should be, despite the express exclusion of arbitration from its scope?
International arbitration is the root of international civil procedure. One can go back as far as to Greek Antiquity to see arbitral proceedings fathering all transnational litigation as we know it today (cf., in French, Majoros, Les conventions internationales en matière de droit privé [Paris 1976], p. 37-44). Therefore, it is about time to bring arbitration “home” again. One does not have to cling to the eclectic and often inane wording of the “scope rules” in the European Regulations. For instance, even the well-established rule as laid down in Art. 1 Brussels I Regulation excluding administrative matters is already judged obsolete (cf. Reinhold Geimer, in: Reinhold Geimer/Rolf A. Schütze [eds.], Europäisches Zivilverfahrensrecht, 2nd ed. Munich 2004, Art. 1 Brussels I Regulation note 1).