CJEU cases about the Withdrawal Agreement – Part 3 on judicial cooperation

This is the third in a series of blogposts on CJEU decisions concerning the UK-EU Withdrawal Agreement by Luke Kelly and Charlotte McLean of Monckton Chambers. In this post, they provide an overview of certain of the Court’s decisions on the topic of judicial cooperation.

Judicial cooperation in this context refers to the framework and mechanisms by which EU Member States’ judicial authorities work together to ensure the effective application and enforcement of EU law. Judicial cooperation aims to facilitate mutual trust and recognition between national legal systems, allowing judicial decisions, evidence, and procedures to operate as seamlessly as possible within the EU.  Several CJEU cases dealing with judicial cooperation have applied the provisions of the Withdrawal Agreement and we discuss them below. 

The first is the CJEU’s judgment of November 2021 in Case C-479/21 PPU Governor of Cloverhill Prison EU:C:2021:929. Clíodhna Kelleher of Monckton Chambers has written a detailed and insightful post about the judgment that is accessible here.

In summary, the case concerned whether Ireland was bound by the European Arrest Warrant (EAW) provisions contained in the Withdrawal Agreement and the Trade and Cooperation Agreement.  The reason that this issue arose was because two individuals had been arrested in Ireland pursuant to EAWs issued by the UK. They challenged their detention as unlawful on the basis that under Irish law EAWs can only be executed under Framework Decision 2002/584 which ceased to apply to the UK with effect from 31 December 2020. One of the pair had been arrested before the end of the Brexit transition period; the other in February 2021. The CJEU had to consider the import of the EAW provisions of the Withdrawal Agreement and the Trade and Cooperation Agreement.

A key issue was whether the EAW provisions in the Withdrawal Agreement and Trade and Cooperation Agreement were binding on Ireland. That was because Article 1 of Protocol 21 to the TFEU, which provides for measures relating to the area of freedom, security and justice (AFSJ) of the EU are not binding on Ireland unless it opts into those measures. The pair argued that the provisions in the Withdrawal Agreement and the Trade and Cooperation Agreement were AFSJ measures and that Ireland had not opted into them, meaning that the EAWs pursuant to which they were arrested were unlawful.

The CJEU rejected this argument and held that Articles 50 and 217 constituted the legal basis for the conclusion of the Withdrawal Agreement and the Trade and Cooperation Agreement, and that the relevant provisions concerning the EAWs were thus binding on Ireland. As Clíodhna Kelleher points out in her post, “[t]he judgment is most interesting for its articulation of the competence of EU to enter into withdrawal and future relationship agreements, with Articles 50 and Article 217 effectively identified as one-stop shops, without the need for these agreements to draw authority from elsewhere in the Treaties.”

In 2022, the CJEU delivered judgments in Case C-723/20 Galapagos BidCo EU:C:2022:209 and Case C-358/21 Tilman SA EU:C:2022:923 relating to the Recast European Insolvency Regulation (REUIR) and the Lugano II Convention, respectively. In both cases the Withdrawal Agreement featured. 

In Galapagos, a holding company with a registered office in Luxembourg decided to relocate its central administration to the UK in June 2019. In August 2019, its directors (also appointed in June 2019) petitioned the High Court in London for the company to be put into liquidation. This triggered an internal power struggle as a group of creditors who held a share pledge stepped in, removed the directors that had initiated insolvency proceedings, and appointed a new director who instituted insolvency proceedings in Germany. The German Bundesgerichtshof (Federal Court) stayed the proceedings and referred several questions to the CJEU for a preliminary ruling concerning Article 3(1) of REUIR which provides that the courts of the Member State within the territory of which the centre of a debtor’s main interests (COMI) is situated shall have jurisdiction to open insolvency proceedings.

The CJEU held that REUIR had to be interpreted such that the Member State in which a debtor’s COMI is located at the time of the initial request to open insolvency proceedings shall retain exclusive jurisdiction even if the debtor relocated its COMI to another Member State shortly prior to the proceedings being opened. The CJEU thus found that REUIR applicable in the UK during the transition period under the Withdrawal Agreement which had the effect that the pending application before the English High Court prevented the German courts from exercising jurisdiction unless and until the English High Court relinquished its jurisdiction. Under the Withdrawal Agreement, the provisions of the REUIR apply in the UK after 31 December 2020 if the “main proceedings” commenced before the end of the transition period.

The High Court ultimately held that the REUIR did not apply because although proceedings been lodged in 2019 in both the UK and Germany, both sets of proceedings had been stayed pending the CJEU’s judgment until after the transition period. The effect of this was that neither constituted the “main proceedings” as contemplated in the Withdrawal Agreement. 

In Tilman, Tilman sued Unilever in Belgium for outstanding amounts under a supply contract. Unilever took the point that the parties’ contractual relationship was governed by general terms and conditions (accessible via a hyperlink the parties’ contract) that contained a clause pursuant to which the parties irrevocably submitted to the exclusive jurisdiction of the English courts. The Belgian court of first instance rejected Unilever’s plea of exclusive jurisdiction and found that it had jurisdiction to hear Tilman’s claim. The Belgian Court of Appeal disagreed and upheld Unilever’s plea that the English courts had exclusive jurisdiction.

The CJEU was then asked to rule on a preliminary issue of whether an exclusive jurisdiction clause in a commercial contract was validly concluded under Articles 23(1)(a) and (2) of the Lugano II Convention where the clause is contained in general terms and conditions that are referred to in a written contract and but accessible on a website, without the counterparty having been asked to accept the general terms and conditions on the website or otherwise. Lugano II is an international treaty that deals with jurisdiction and the recognition and enforcement of judgments in civil and commercial matters between the EU and specific non-EU countries. It effectively extends the rules in the Brussels I Regulation to non-EU states that are part of the European Economic Area and the European Free Trade Association.

In order to rule on the issue that had been referred to it, the CJEU had to determine the threshold question of whether Lugano II remained applicable to the dispute given the impact of Brexit.  As an EU Member State, the UK had been a party to Lugano II.

The CJEU held that although the UK ceased to be a party to it with effect from 31 January 2020, Lugano II nevertheless applied during the transition period by virtue of Article 127 of the Withdrawal Agreement. In Tilman the parties had instituted the relevant judicial proceedings prior to the expiry of the transition period and so the CJEU found that the interpretation of Lugano II was necessary to resolve the dispute between them, and that under Articles 23(1) and (2) they had validly concluded the exclusive jurisdiction clause at issue.

In 2023, the CJEU delivered judgments in three cases concerning judicial cooperation in which the Withdrawal Agreement applied: Case C-567/21 BNP Paribas SA EU:C:2023:452; Case C-590/21 Charles Taylor Adjusting EU:C:2023:633 and Case C-632/21 Diamond Resorts Europe EU:C:2023:671.  These cases dealt with the interaction between the Withdrawal Agreement and the Brussels I Regulations and Rome I Regulations.

In BNP Paribas, a French national (TR) that had been employed by BNP Paribas pursuant to a contract governed by English law was seconded to London and dismissed for serious misconduct. He brought an action before the Central London Employment Tribunal seeking a finding of unfair dismissal and compensation, reserving his rights to submit claims for payment in connection with the termination of his employment contract. On 26 September 2014, the Employment Tribunal determined that TR’s claim was well-founded and referred certain issues relating to remedies to a subsequent hearing. BNP Paribas was ordered to pay him compensatory damages in the sum of £81,750. Several months later he instituted proceedings in the Labour Tribunal in Paris in which he sought the payment of various additional sums, including compensation for his dismissal. In mid-2016, those claims were held to be inadmissible due to the application of the English law principle of res judicata.

The Court of Appeal in Paris overturned the judgment of the Labour Tribunal on the basis that the claims brought in the UK Employment Tribunal were based on different causes of action to those brought in France. BNP Paribas then sought to appeal to the French Court of Cassation which in turn sought a preliminary ruling from the CJEU. The CJEU was asked inter alia to rule on whether Articles 33 and 36 of the Brussels I Regulation (dealing with jurisdiction and the recognition and enforcement of judgments in civil and commercial matters) should be interpreted as precluding TR’s claims on the basis that they were res judicata. It was in that context that the Withdrawal Agreement became relevant.

The CJEU found that: (1) Articles 33 and 36 of Brussels I must be interpreted as precluding a Member State (in that case France) from recognising a judgment of another Member State (in that case the UK) that renders inadmissible claims in the latter Member State because of procedural rules (res judicata) of the former Member State; and (2) pursuant to Article 67(2)(a) of the Withdrawal Agreement (read with Articles 126 and 127), Brussels I remained applicable throughout the transition period such that the French courts had to treat the judgment of the UK Employment Tribunal as a judgment of a court of a Member State.

Brussels I and the Withdrawal Agreement also came up in Charles Taylor Adjusting.  In that case a vessel, the Alexandros T, sank off the coast of South Africa. Its owner, Starlight, and operator, OME, sought indemnity from the vessel’s insurers who rejected their claims. Starlight then brought proceedings in the High Court in England and commenced an arbitration against one insurer. The disputes were settled and High Court granted orders confirming the settlements in December 2007 and January 2008, ordering suspension of any further related proceedings. Despite the settlements, Starlight, OME, and others later brought actions before the Piraeus Court of First Instance in Greece against the insurers’ representatives, Charles Taylor and its director (FD) alleging that they had made false and defamatory statements concerning defects in the vessel. In response, Charles Taylor and FD launched proceedings in the High Court in England seeking declarations that the Greek actions breached the settlement agreements. In September 2014, the High Court ruled in their favour. Charles Taylor and FD then sought recognition of that judgment in Greece under Brussels I.

The Piraeus Court of First Instance made an order recognising the judgment. However, the Piraeus Court of Appeal set it aside in 2019, finding the orders made by the High Court were “quasi anti-suit injunctions” contrary to Greek public policy and Article 6(1) of the ECHR. Charles Taylor and FD appealed to the Greek Court of Cassation, arguing the judgment of the English High Court was not contrary to public policy and did not prevent access to Greek courts. In June 2021, the Court of Cassation referred questions to the CJEU on whether recognition may be refused under Articles 34(1) and 45(1) of Brussels I where a judgment effectively restricts proceedings in another Member State and is deemed contrary to national or EU public policy.  As in BNP Paribas (discussed above) Articles 67(2), 126 and 127 of the Withdrawal Agreement meant that EU law (Brussels I in particular) applied to the relevant UK judgments.

The CJEU found that Brussels I must be interpreted as meaning that a court or tribunal of a Member State may refuse to recognise and enforce a judgment of a court or tribunal of another Member State on the ground that it is contrary to public policy, “where that judgment impedes the continuation of proceedings pending before another court or tribunal of the former Member State…” thereby paving the way for the Greek courts to potentially refuse to recognise the judgment of the High Court in England.

Although not addressed in the judgment, it is worth noting that at the end of the transition period, the Civil Jurisdiction and Judgments (Amendment) (EU Exit) Regulations 2019 (SI 2019/479), as amended by the Civil, Criminal and Family Justice (Amendment) (EU Exit) Regulations 2020 (SI 2020/1493), revoked Brussels I subject to transitional provisions that preserve its application to proceedings instituted before the end of the transition period.

In Diamond Resorts Europe two British consumers, both resident in the UK, concluded timeshare-style contracts in 2008 and 2010 with Diamond Resorts Europe, an English company with a branch in Spain. The contracts granted them points entitling them to use various holiday accommodations in Europe but without any fixed property or period allocated. They sought to have those contracts declared invalid under Spanish laws regulating timeshare rights by arguing that the contracts created rights in remover immovable property that failed to meet mandatory Spanish formalities (such as registration, fixed duration, and identification of specific accommodation). Diamond Resorts Europe contended that the contracts created only personal rights that were governed by English law, as the parties were UK nationals, UK residents, and the company’s headquarters were in the UK.  The CJEU found that the Rome I (governing matters such as the choice of law) continued to apply to the parties’ dispute by virtue of Articles 66(a) and 126 of the Withdrawal Agreement.

It is noted that Rome I has been converted into UK law as retained EU law and was amended by UK legislation. On 31 January 2020, the Law Applicable to Contractual Obligations and Non-Contractual Obligations (Amendment etc.) (UK Exit) Regulations 2019 (SI 2019/834) came into force. The Regulations provide for the continued application of the retained EU law version of Rome I (UK Rome I) as domestic law in all parts of the UK, determine the law applicable to contractual obligations, and amend UK Rome I. The Regulations were subsequently amended by the Jurisdiction, Judgments and Applicable Law (Amendment) (EU Exit) Regulations 2020 which amends the definitions, in domestic legislation, of UK Rome I, and clarifies whether references to Rome I in domestic law are to Rome I or UK Rome I.

In 2024, the CJEU delivered its judgment in Joined Cases C-345/22 to C-347/22 Maersk A/S EU:C:2024:349.  These cases concerned three identical requests for a preliminary ruling on the interpretation of Article 25(1) of Regulation 1215/2012 (Recast Brussels Regulation or Brussels Ia).  

In each case goods had been transported by sea under contracts of carriage evidenced by bills of lading. The goods arrived at the destination damaged. The consignee (purchaser) was indemnified by an insurer, and the insurer had subrogated the rights under the bill of lading. The bills of lading contained an exclusive jurisdiction clause providing that dispute arising under the contract of carriage had to be determined in the English courts. The third-party holders of subrogated rights under the bills of lading brought proceedings in Spain claiming damages from the carriers. The carriers sought to challenge the Spanish courts’ jurisdiction on the basis of the jurisdiction clause. The referring court then asked the CJEU for a preliminary ruling on two questions that essentially went to whether Brussels Ia applied to the third-party holders of subrogated rights, or whether Spanish law applied, in which case the third parties would have had to have individually and separately negotiated the exclusive jurisdiction clauses in order for them to be enforceable.

The CJEU found that the exclusive jurisdiction clause was enforceable against the third-party holder if: (1) upon acquiring the bill of lading, the third-party is subrogated to all the rights and obligations of one of the original parties to the contract; and (2) the exclusive jurisdiction clause operates in this context under the national law of the relevant Member State seized of the dispute. The Withdrawal Agreement was relevant in that it meant that Brussels Ia continued to apply as the UK courts were treated as courts of a Member State until the end of the transition period and the relevant proceedings were instituted before the end of the transition period.

Finally, it is worth noting that Brussels Ia does not apply in the UK to proceedings instituted after the end of the transition period. Jurisdiction is instead determined by a combination of the existing common law and statute, (which has always applied to cases falling outside the European regime), and (where it applies) the Hague Convention.

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