Franzina on Jurisdiction Regarding Rights in Rem in Moveable Property in the Brussels I Review


Pietro Franzina (University of Ferrara) has posted “The Proposed New Rule of Special Jurisdiction Regarding Rights in Rem in Moveable Property: A Good Option for a Reformed Brussels I Regulation?” on SSRN.  The abstract reads:

On 14 December 2010, the European Commission published a proposal for the recasting of regulation No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Brussels I). The proposal purports, inter alia, to add a provision granting non-exclusive jurisdiction “as regards rights in rem and possession in moveable property” to “the courts for the place where the property is situated”. The paper examines the scope of application of the proposed new rule and the connecting factor it employs, in an attempt to determine whether it would be a useful addition to the existing rules on jurisdiction in civil and commercial matters in Europe. It concludes that, although it may in some cases (and subject to some conditions) serve the goals of proximity of predictability underlying the special heads of jurisdiction of the Brussels I regulation, the provision would bring more disadvantages than advantages, and suggests that the Commission’s proposal in this respect should better be abandoned.

The article is forthcoming in “Diritto del Commercio Internazionale” (issue 3/2011).

3 replies
  1. Wouter van den Wildenberg says:

    As someone interested in the topic, I enjoyed the thorough discussion the paper provides. I am certainly looking forward to future publications.

    Your arguments for restricting the term ‘moveable property’ in the proposed art 5(3) to just tangible assets did not entirely pursuade me though. As you write, it is possible to determine the situs of receivables in abstracto as the Insolvency Regulation does. Its goal is in fact not so different from that of the Brussels I Regulation: Brussels I seeks to strengthen individuals’ ability to litigate cross-border disputes effectively (‘access to justice’), and the IR aims to do the same for collective proceedings (see recitals 2-5). To that end, both instruments designate a single forum to deal with disputes regarding rights in rem. Any particular justifications provided for arts 5 and 2(g) of the IR and the proposed art 5(3) cannot been seen seperately from the greater purpose of the entire regulation. I think therefore that art 2(g) should be applied to interpret the phrase used in the Commission’s proposal, absent any indications that it should not.

    Excluding intangibles from the proposed art 5(3) also leads to the following problematic situation. A secured creditor seeking additional information (e.g. details of debtors of the secured book debts) to enfore a right in rem outside the insolvency of his debtor may find that the domestic conflict of laws rules applied by courts lead to different results. For example, one may hold the situs of a debt to be the place where the person owing that debt is based, whilst another may find that the court in the place of business of the principal debtor is actually the proper forum. Absent a choice of court agreement, the secured creditor is therefore at the mercy of whatever regime of private international law he runs into – not a result compatible with the Commission’s aim of promoting access to justice.

    I think therefore that the inclusion of incorporeal goods into the definition of ‘moveable property’ would be the better option. It would of course be nice for the Commission to offer some guidance as to which interpretation is correct.

  2. Pietro Franzina says:

    Wouter, thank you very much for your interesting comments. Just a few remarks on some of the issues you raised.

    (1) The situs of intangible assets cannot be determined empirically. A rule is needed, all the better if it is a uniform one (we would otherwise be faced with the kind of problems the Tessili doctrine is famous for). There are different kinds of intangible assets, and I am not sure that Article 2(g) of the Insolvency regulation would provide a good answer for all of them. One should therefore envisage to supplement the new rule proposed by the Commission with a set of provisions determining the situs as regards different kinds of incorporeal assets (claims, financial instruments etc.). Would that be worth the effort? I doubt it: rules of special jurisdiction should in principle be capable of a swift operation and result in the designation of a predictable court, sitting close to the subject matter of the proceedings. Would such a complex regime be in line with those goals?

    (2) Apart from this, I wonder how often litigation involving intangible assets is actually concerned with “rights in rem” therein: when proceedings do not concern the assets as such (but rather a contractual relationship relating thereto, or a tort committed in connection with those assets), then the new rule would be inapplicable altogether.

    (3) I agree with you that there may be good reasons, in some cases, for having a single court entitled to hear all the claims as regards rights in rem in a given item of property. Yet, as far as I can see, this is not what the Commission purported to do with the provision we are talking about, as it only grants the designated court a non-exclusive jurisdiction.

  3. Wouter van den Wildenberg says:

    Dr Franzina, many thanks for your interesting response.

    I think the heart of the matter is that I am uncertain in how far the proposed art 5(3) grants non-exclusive jurisdiction. If so, disputes concerning rights in rem can also be brought in the court of the place of residence of the defendant pursuant to art 2(1) (art 3(1) in the proposal). Clearly that court will have jurisdiction in personam, as Trevor Hartley puts it ‘the power to make a binding order against a specified person’ (LQR 2010, 197). I am less certain whether Brussels I also grants the same court jurisdiction in rem: the power to rule on the status of a thing. Paragraphs (1) and maybe (3) and (4) of art 22 indicate that such jurisdiction rests with a one forum exclusively. The lack of such a uniform rule for disputes regarding movables seems to be a gap in the Regulation, that can be closed with a rule clearly designating a court as having jurisdiction in rem – which is what the new art 5(3) might do. I therefore think that intangibles conflicts should either be ‘read into’ art 5(3) or be given specific jurisdiction rules. Of course, a clarification of art 2(1)’s application to jurisdiction in rem could also solve the existing uncertainty.

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