European Union - the Commission publishes its long-awaited proposal on a replacement for the Brussels Regulation; proposes changes to the arbitration exception

On 14 December 2010 the European Commission published its proposals for the reform of the Brussels Regulation governing the recognition and enforcement of civil and commercial judgments (proposal for a Regulation of the European Parliament and of the Council on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters Brussels 14/12/2010 COM (2010) 748 Final 2010/0383 (COD)). The interface between litigation and arbitration under the Brussels Regulation has been a source of much discussion and debate among both academics and practitioners, especially in light of the European Court of Justice's decisions in Allianz SpA (formerly Riunione Adriatica Di Sicurta SpA) and Others v West Tankers Inc (C-185/07) and National Navigation Co v Endesa Generacion SA [2009] EWCA Civ 1397 (discussed in earlier Herbert Smith e-bulletins available here and here). The proposal introduces a new rule that a member state court seised of a dispute must stay its proceedings where its jurisdiction is contested on the basis of an arbitration agreement and an arbitral tribunal has been constituted or court proceedings have begun in the member state which is the seat of the arbitration. The new rule should reinforce the enforceability of arbitration agreements and reduce the possibility of abusive litigation tactics. The proposals will be sent to the European Parliament and the Council to be considered under the ordinary legislative procedure, with the new Regulation expected to be adopted within the next two to three years.  The Commission's proposals are discussed in more detail in an earlier e-bulletin available here.