CJEU Rules on Lis Pendens Doctrine After Initiation of Interlocutory Proceedings
On 4 May 2017, the Court of Justice of the European Union (the CJEU) handed down a judgment interpreting and clarifying the rules on parallel litigation and lis pendens in trans-European civil and commercial litigation.
As you certainly know, parallel litigation and lis pendens refer to a situation that occurs when different legal proceedings relating to the same object and cause of action are brought between the same parties in the courts of different forums. In such a situation, in order to reduce concurrent proceedings before the courts of various Member States and to avoid irreconcilable decisions, Article 27 and following of the Regulation No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (the Brussels Regulation) provide that the first court seized with the dispute shall have the exclusive power to establish whether it is competent to rule on the particular dispute. It is only if this first court finds that it does not have jurisdiction to hear the case that the other courts will regain the power to hear that case. However, if the court first seized has confirmed its jurisdiction then the other courts shall decline jurisdiction in favour of that court.
In the case at hand, the CJEU was asked to interpret Article 27 and following of the Brussels Regulation in order to examine whether interlocutory proceedings brought before the courts of one Member State pre-empted legal proceedings to be brought before the courts of the other Member States in a dispute involving the same parties and the same cause of action.
The case concerned HanseYachts, a German motorboat and yachts manufacturer, which had sold a boat to its French dealer (Port D’Hiver Yachting), which, in turn, resold the boat to a company called SMCA in April 2010. In 2011, after damage had appeared on the boat’s engine, SMCA filed a claim for interlocutory proceedings before the Marseilles Commercial Court (France) against (among others) Port D’Hiver Yachting and HanseYachts, seeking measures of enquiry and preservation of evidence. It was, however, only in 2015, that a substantive application seeking compensation for the alleged loss was filed before the French courts.
In the meantime, after the initiation of the interlocutory proceedings but before the initiation of the substantive proceedings, HanseYachts brought an action before the German courts seeking a negative declaration that it was not liable for the loss suffered.
Opposing the proceedings, Port D’Hiver Yachting and SMCA alleged, on the other hand, that Articles 27 and following of the Brussels Regulation required the German court to stay its proceedings since it was not the first court seized on this matter.
Uncertain as to the answer to this issue, the German court referred the matter to the CJEU for a preliminary ruling.
In reaching its judgment, the CJEU examined the French legal provision which permits a party in a dispute to request interlocutory proceedings (Article 145 of the French Code of Civil Procedure). The CJEU found, in particular, that although a connection could be found between the interlocutory proceedings and the substantive proceedings, both were independent from one another. Consequently, the CJEU found that the Brussels Regulation did not preclude the initiation of legal proceedings in one Member States even though interlocutory proceedings had already been brought in the same dispute before the courts of another Member States. The legal proceedings brought by HanseYachts before the German court were therefore valid.
It is important to note that although the Brussels Regulation has been replaced by Regulation No 1215/2012 of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (the Brussels Ibis Regulation), the findings of the CJEU in this case are fully applicable to the Brussels Ibis Regulation since the latter contains provisions similar to those contained in Article 27 and following of the Brussels Regulation.