Recent Developments in Arbitration and Eu Law

Article excerpt

The intersection of arbitration and European Union law in cross-border disputes involving a member of the EU.

In earlier times arbitration was viewed by the courts with suspicion because it was regarded as a competitor of judicial trials.1 Today, judicial and arbitration proceedings coexist, complement and compete with each other. As a result, commercial arbitration has become quite important in the cross-border context. This raises the question of how arbitration interacts with European Union law when Member States become involved in cross-border disputes. This article examines the intersection of arbitration and EU law.

The Arbitration Exclusion in EU Treaties and Regulations

European Union treaties and regulations do not deal with international arbitration,2 which is a self-sufficient system of dispute resolution. One of the founding EU treaties, the Treaty on the Functioning of the European Union (TFEU), lists the competences of the EU. However, arbitration is not among the exclusive or shared competences of the EU.

In addition, the EU laws relating to judicial matters in the EU either do not mention arbitration or exclude it specifically. These laws are known collectively as the Brussels Regime. There are three documents: (1) the Brussels Con - vention on Jurisdiction and the Enforcement of Judg ments in Civil and Commercial Matters, (2) the Lugano Conven tion on Jurisdic tion and the Enforcement of Judgments in Civil and Com - mercial Matters,3 and (3) the 2002 Brussels I Regulation.

The Brussels Convention (1968) had several objectives: to avoid parallel legal proceedings within the Community, to simplify the recognition and enforcement of judgments, and to strengthen the legal protection afforded to citizens of Member States. Article 1, second paragraph, subsection (4) of the Brussels Convention explicitly states that it "does not apply to arbitration."

The Lugano Convention (1988) extended the range of the Brussels Regime to "create common rules regarding jurisdiction and judgments across a single legal space consisting of the Member States ...and the three European Free Trade Association states of Iceland, Norway, and Switzerland." It expressly superseded two conventions on the enforcement of judgments and arbitration awards. Otherwise it contained no arbitration provisions.

The Brussels I Regulation (2002) replaced the Brussels Convention. It was designed to contribute to the continued development of freedom, security and justice in the EU and to the "sound operation of the internal market." Like the Brus - sels Convention it excludes arbitration, stating in Article 1(2)(d), "[t]he Regulation shall not apply to [...] arbitration."4

A more recent EU law known as Rome I (Reg - ulation (EC) No 593/2008 of the European Parlia - ment and of the Council of 17 June 2008) on the law applicable to contractual obligations, also excludes arbitration.5 Article 1(2)(e) of Rome I states, "The following shall be excluded from the scope of this Regulation: [...] arbitration agreements and agreements on the choice of court."

The exclusion of arbitration from the substantive scope of the Brussels Convention and subsequent EU law appears to have been motivated by the United Nations Convention on the Recogni tion and Enforcement of Foreign Arbitral Awards (known as the New York Convention) and the European Convention on Inter national Com - mercial Arbitration, of which Member States are signatories. As a result, it probably was not considered necessary to have EU laws apply to arbitration-related state court proceedings, court proceedings to recognize or enforce foreign arbitral awards, or proceedings to set aside a foreign arbitral award.

These proceedings are not governed by EU law but by the New York Convention. Article IV states what must be provided for en - forcement and recognition and Article V lists the grounds when recognition and enforcement may be refused by the court. …