Court of Justice of European Union Rules on Lis Pendens Doctrine After Initiation of Interlocutory Proceedings
- 08/05/2017
- Articles
On 4 May 2017, the Court of Justice of the European Union (the "ECJ") delivered a judgment interpreting and clarifying the rules on parallel litigation and lis pendens in trans-European civil and commercial litigation.
Parallel litigation and lis pendens refer to a situation in which 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 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 will have the exclusive power to establish whether it is competent to rule on the particular dispute. It is only if the 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 confirms its jurisdiction, then the other courts will have to decline jurisdiction in favour of that court.
In the case at hand, the ECJ was asked to interpret Article 27 and following of the Brussels Regulation in order to decide 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 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 had brought an action before a German court seeking a negative declaration that it was not liable for the loss suffered.
Objecting to the German proceedings, Port D'Hiver Yachting and SMCA argued 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 of this matter.
The German court then referred the matter to the ECJ for a preliminary ruling.
In reaching its judgment, the ECJ examined the French statutory provision which permits a party in a dispute to request interlocutory proceedings (Article 145 of the French Code of Civil Procedure). The ECJ found that although a connection could be found between the interlocutory proceedings and the substantive proceedings, both were independent from one another. Consequently, the ECJ held that the Brussels Regulation did not preclude the initiation of legal proceedings in a second Member State, even though interlocutory proceedings had already been brought in the same dispute before the courts of a first Member State. 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 ECJ in this case fully apply to the Brussels Ibis Regulation since the latter contains provisions similar to those contained in Article 27 and following of the Brussels Regulation.
