//= do_shortcode('[niu_breadcrumbs single_blog="1"]') ?> Supremacy of EU law: the Brussels Convention on the validity of a foreign jurisdiction clause Authors: Karl Grech Orr, Francesca Vassallo Published on September 16, 2024 On 25th April 2024, the Court of Justice of the European Union (“CJEU”), composed of Judges P.G. Xuereb, A. Kumin and I. Ziemele, in Joined Cases C-345/22, C-346/22 and C-347/22 in the names Maersk A/S v Allianz Seguros y Reaseguros SA and Mapfre España Compañía de Seguros y Reaseguros SA v MACS Maritime Carrier Shipping GmbH & Co, ruled, among other things, in favour of the validity of a foreign jurisdiction clause incorporated in a bill of lading and its validity against a third party holder of that bill of lading on the basis of EU law, therefore precluding Spanish national legislation which required foreign jurisdiction clauses to be separately negotiated by such third party in order to be valid. These cases concerned three identical requests for a preliminary ruling on the interpretation of Article 25(1) of Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (“the Brussels Ia Regulation”). The requests were brought, in Cases C-345/22 and C-347/22, by Danish transport company Maersk A/S (“Maersk”) and Spanish insurance company Allianz Seguros y Reaseguros SA (“Allianz”), and in Case C-346/22 by the Spanish insurance company Mapfre España Compañía de Seguros y Reaseguros SA (“Mapfre”) and the German transport company MACS Maritime Carrier Shipping GmbH & Co. (“MACS”). The facts were similar in the three cases. The cargo which was shipped by the carrier was received damaged. The insurance company indemnified the recipients and subrogated their rights under the bill of lading as a third-party holder. The bills of ladings contained an exclusive foreign jurisdiction clause, selecting the English Courts to decide and determine any dispute. Despite this, the insurance company filed legal proceedings against the respective shipping companies before the Spanish Courts for damages. The central issue in the Spanish legal proceedings was whether the insurance companies, as claimants, were bound by the foreign jurisdiction clause in the original contracts of carriage, in terms of the bills of ladings signed between the carrier and the shipper. On their part, the shipping companies objected to the jurisdiction of Spanish Courts, on grounds that the English Courts were vested with exclusive jurisdiction under the bill of lading. However, the Spanish Commercial Court dismissed their jurisdiction pleas. The shipping companies, Maersk and MACS, appealed separately. It was argued that Article 25(1) of the Brussels Ia Regulation was applicable in the circumstances and that the relative Spanish legal provision which required the third party to accept to be bound by the foreign jurisdiction clause was contrary to EU law. Faced with these appeals in the three separate cases, the Spanish Appeal Court referred the issue on the interpretation of foreign jurisdiction clause to the CJEU and stayed their proceedings. Considerations of the CJEU The referring Spanish Appeal Court was uncertain as to whether the jurisdiction clause was enforceable against the third-party holder of the bill of lading, in the case where such third party did not expressly, individually and separately consent to it, upon being subrogated to the rights under the bill of lading according to Spanish law. The following questions were referred to the CJEU: Whether Article 25(1) of the Brussels Ia Regulation had to be interpreted in the sense that the enforceability of a foreign jurisdiction clause against the third-party holder of the bill of lading, containing such clause, was to be governed by the law of the Member State of the court designated by that clause – English law in this case. Whether Article 25(1) of the Brussels Ia Regulation should be interpreted to preclude the application of the relevant national legislation, under which a third-party was subrogated to all the shipper’s rights and obligations, except for those arising under a jurisdiction clause, and whether such clause was only enforceable against the third-party if it was negotiated individually and separately. With regards to the first question, the CJEU maintained that article 25(1) of the Brussels Ia Regulation did not specify what the effects of a jurisdiction clause were vis-à-vis a third party. However, with reference to case law of this court, it noted that a foreign jurisdiction clause in a bill of lading was binding upon a third-party holder, provided: there was subrogation of rights under national legislation and such clause was valid between the shipper and the carrier. As regards the second question, the CJEU first considered the relevant Spanish shipping law, whereby the rights of the shipper under a bill of lading were transferred to the third-party consignee save for any foreign jurisdiction and arbitration clause. Under Spanish law, the third party had to expressly consent to any foreign jurisdiction clause. Otherwise, such clause would be deemed to be null and void and this, under Spanish law, was without prejudice to the provisions of the international agreements applicable to Spain and to EU law rules. The CJEU held that it was up to the referring court to decide whether, according to national law rules, each of the third-party holders were subrogated to all the rights and obligations of the shippers concerned. If they were, then there was no need to ascertain whether the third parties actually accepted those clauses. Decision of the CJEU On the first question, the CJEU ruled that the enforceability of a jurisdiction clause against a third-party holder is not governed by the law of the Member State of the court designated by that clause. Rather, the jurisdiction clause is enforceable against the third-party holder if, upon acquiring the bill of lading, it is subrogated to all the rights and obligations of one of the original parties to the contract. In turn, subrogation must be assessed according to national substantive law by applying the private international law rules of the Member State of the court seized of the dispute. Ruling on the second question, the CJEU stated that in this respect, the Spanish national legislation in question had the effect of granting more rights to the third-party holder than those enjoyed by the shipper who the third-party succeeded. Under Spanish law, in this case, the third-party was free to disregard the foreign jurisdiction agreed in the original bill of lading. The CJEU therefore ruled that the exception under Spanish legislation, whereby a foreign jurisdiction clause can be rendered ineffective against third-party holders unless it has been separately negotiated and accepted by them, has the effect of circumventing Article 25(1) of the Brussels Ia Regulation and is therefore contrary to this provision. The court therefore upheld the principle of primacy of EU law, which requires national courts to interpret, to the greatest extent possible, their national law in conformity with EU law. Disclaimer: Ganado Advocates is responsible for contributing to this law report but was not in any way involved as legal advisor for the parties in the judgement being covered in this law report. This article was first published in ‘The Malta Independent’ on 11/09/2024. Go back