Rethinking Judicial Jurisdiction in Private International Law

Party Autonomy, Categorical Equality and Sovereignty

Milana Karayanidi

• Publisher: Hart Publishing
• Year: 2020
• ISBN:
  9781509924783
• Edition: 1
• Topic: Law
• Subtopic: Conflict of Laws
• Index: Law

This book explores the theory and practice of judicial jurisdiction within the field of private international law. It offers a revised look at values justifying the power of courts to hear and decide cross-border disputes, and demonstrates that a re-conceptualisation of jurisdiction is needed. Rather than deriving from territorial power of states, jurisdiction in civil and commercial cross-border matters ought to be driven by party autonomy. This autonomy can be limited by certain considerations of equality and critical state sovereign interests. The book applies this normative view to the existing rules of jurisdiction in the European Union and the Russian Federation. These regimes are chosen due to their unique positions towards values in private international law and contrasting societal norms that generate and accommodate these values. Notwithstanding disparate cultural and political ideas, these regimes reveal a surprising level of consistency when it comes to enforcement of party autonomy. There is, nevertheless, room for improvement. The book demonstrates to scholars, policy makers and lawmakers that jurisdiction should be re-centred around the interests of private actors, and proposes ways to improve the current rules.

1

Introduction

The fundamental question I explore in this book concerns reconceptualisation of values in judicial jurisdiction based on party autonomy. Judicial jurisdiction is best defined as the authority of a given court over a particular dispute. As a subject of study, jurisdiction is fascinating and mysterious, similar to the conundrum of Schrödinger’s cat.¹ The mystery is whether the court shall or shall not have the authority to handle a dispute. In many cases, the answer could be yes and no simultaneously. At any rate, the question presents a challenge and a topic for an engaging intellectual discussion. Complexity and diversity of private international law regimes across the world, and each of them offering their own unique solution to different questions, make the discussion even more interesting. The recent reform of the Brussels I Regulation on jurisdiction in 2012–15² and the ongoing judicial reform in Russia³ shows the subject matter of this research to be at the heart of legislative discussions. Moreover, the Judgments Project by the Hague Conference on Private International Law brings renewed global attention to the question of jurisdiction.⁴

This book challenges the traditional approach to jurisdiction that understands jurisdiction in terms of power, territoriality and sovereignty and contends that states set conditions for allocating personal jurisdiction based on their sovereignty. However, placing state sovereignty as the foundation for jurisdiction fails to account for the individual interests of private parties. It appears inadequate in light of the rise of private interests in the liberalised world economy. It lacks necessary personification of individuals and legal entities as autonomous actors in international law. That is why I am proposing an alternative and novel way to analyse the rules of jurisdiction in private international law.

The main idea of this book is that an ideal jurisdiction system should give full effect to the parties’ will, limited by considerations of equality and fairness and some state original interests. I construct a normative argument regarding the values in private international law that justify and determine judicial jurisdiction. My purpose is to offer a better perspective on these values. I aim to persuade scholars, policymakers and lawmakers that as a normative standard, an ideal jurisdiction system shall take the interests of private actors as a primary building block and define the rest of the rules from there. I argue that private international law rules should aim to enforce the will of private parties. Rather than the states, I show that private actors (natural and legal persons) should drive and shape the order of prescribing adjudicative jurisdiction of courts in international matters. Their autonomous choice of forum, as the ultimate expression of private interests, should constitute the basis of determining judicial jurisdiction. Where parties explicitly express their choice of jurisdiction (via jurisdiction agreements and by voluntary submission), it would be upheld by the courts.

However, although party autonomy should be an essential element in the hierarchy of values behind civil jurisdiction, it cannot be unlimited. Unlimited party autonomy to choose a forum might result in opportunism and advantage being taken by a party better positioned to negotiate jurisdiction. With no governmental interference, unrestricted private power to allocate jurisdiction would inevitably lean in the direction beneficial to the actors with stronger bargaining positions. In view of protecting the equality and rights of all market players, including those with weaker bargaining power, some constraints should be placed on party autonomy to choose a forum. Having learned from the nineteenth century’s economic liberalism and the reasons that led to the decline of the pure laissez-faire policy, our society should be cautious about unlimited freedom to designate a forum for dispute resolution. So, for example, forum selection clauses inserted unilaterally in contracts of adhesion should only be given effect where they do not abrogate the weaker party’s access to justice.

I concede to further limitations on private party autonomy to choose jurisdiction. In exceptional cases, party autonomy may be overridden by state exclusive jurisdiction rules, if protecting state interests is of crucial importance. These exceptions should not extend further than absolutely necessity. They manifest themselves in a few uniformly accepted exclusive jurisdiction rules, such as jurisdiction at the location of real property in cases regarding titles to real property, etc. By conceding to certain exceptions to party autonomy, I advance a reconstructed liberal view. Unlike a classical view (unchanged by the development of academic thought throughout the last century), I engage with many traditional and contemporary views and use them to help refine my argument. In the end, I propose an argument, aware of the critique, and defend it against inconsistent approaches.

My argument relies on the rules of jurisdiction as they exist today in two legal systems: the EU and Russia. My choice of the EU and Russia is predicated by their unique positions towards values in private international law and contrasting societal norms that generate and accommodate these values. It is also supported by my knowledge of these two regimes acquired during educational training in a post-Soviet (civil) legal system, the UK common law and EU law, as well as my cultural immersion in these societies. I compare jurisdiction rules in these regimes and analyse the problems arising in practice. I discern and revisit the broader values of private international law. I reveal a surprising consistency when it comes to recognition and enforcement of party autonomy in both targeted regimes, notwithstanding disparate cultural and political ideas. By engaging with the Russian and the EU regimes (and English common law), I show ways to improve the existing rules.

There are many other connected questions that could have been included in this study, such as choice of law, enforcement of judgments, or rules in other jurisdictions. However, in this book, I focus only on allocating an appropriate forum to settle disputes (judicial jurisdiction) and only in relation to the common EU regime and the Russian system. I focus only on the disputes of international character, ie, relationships falling outside the range of one state (as opposed to purely national jurisdiction rules). At some junctions, my analysis delves into national jurisdiction doctrine and law, but only to apply the results of the findings to the private international law sphere. Finally, I concentrate on the regulation of jurisdiction in civil and commercial matters. I exclude disputes of an administrative nature, the matters of antitrust and other areas traditionally classified as public law. Furthermore, I exclude matters of family law, since the subject of family law constitutes an autonomous category within private international law, and is guided by principles slightly different from those organising civil and commercial relationships. Moreover, international jurisdiction of courts in family matters (matrimonial matters, divorce proceedings, maintenance, wills and succession, etc) in the EU is regulated by a number of instruments,⁵ all of which could not be comprehensively analysed within this book.

The following chapters are organised as follows:

•The first chapter presents the main argument.

•The three parts elaborate on the details of the overall argument.

•An overall conclusion follows.

In the first chapter, I summarise my main argument. I argue that jurisdiction in civil and commercial matters should be based on a framework of values different from the status quo. I present an approach based on party autonomy limited by considerations of categorical equality and sovereignty. I set out the correlation of these values in relation to each other. I also introduce general features of the existing EU and Russian jurisdictional regimes.

Further, this book consists of three parts. In part I (chapters three and four), I delve into the details on justification of the general rule in an ideal jurisdiction regime – party autonomy. I justify the notion of party autonomy as the grounding rule of an ideal jurisdiction system that caters to the interests of private parties. I argue that state sovereignty should play only an auxiliary role. In an attempt to demonstrate the shift of priorities in judicial jurisdiction, I seek support in the philosophical and legal arguments offered by Western and Russian scholars. On that basis, I demonstrate how my proposed approach can fit the existing jurisdictional systems in the EU and Russia. I analyse the rules and the case law, showing the degree of recognition of party autonomy in these regimes, and comment on ways to improve the existing rules to better reflect private interests.

In Part II (chapters five and six), I revisit and re-evaluate the case law and scholarship, explaining why party autonomy cannot be unlimited. I show how the notion of party equality should safeguard enforcement of meaningful consent in jurisdiction. I demonstrate the degree of consistency of the existing legal rules in the EU and Russia with this view in my analysis of the rules of protective jurisdiction. I further theorise how balancing private interests should guide allocating jurisdiction in the absence of a clear choice of forum by the parties.

In Part III (chapters seven and eight), I continue my argument against sovereignty, being traditionally placed at the foundation of a jurisdiction system. In light of the decline of the importance of state sovereignty and territoriality, I propose to reconsider the traditional position. I agree, however, that there is some limited place for sovereignty in the hierarchy of values behind jurisdiction rules. I specify why and in which exceptional cases state sovereign interests may override party autonomy. Again, I measure this approach against the existing general and exclusive jurisdiction rules in the EU and Russia.

In conclusion, I bring all threads of my argument together and summarise my findings (chapter nine). I also propose some recommendations for improving the existing EU and Russian jurisdiction regimes.

¹For comparison of the Conflict of Laws to Schrödinger’s cat, see Lord Mance, ‘In a Manner of Speaking: How Do Common, Civil and European Law Compare? (2014) 78 Rabel Zeitschrift für Ausländisches und Internationales Privatrecht 231.

²Regulation (EU) 1215/2012 of 12 December 2012 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters (Recast) [2012] OJ L351/1 (the Brussels I Recast), which substantially revised Regulation (EC) 44/2001 of 22 December 2000 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters [2001] OJ L12/1 (the Brussels I Regulation).

³In 2014, the Supreme Arbitrazh (Commercial) Court was abolished and its functions and authority were transferred to the Supreme Court of the Russian Federation. Since then (and projected for the next few years), the rules of civil and arbitrazh procedure are to be consolidated in the forthcoming unified Civil Procedural Code. See text to n 65 of ch 2.

⁴The Hague Conference on Private International Law (HCCH), ‘The Judgments Project’ (Overview by the HCCH), available at: www.hcch.net/en/projects/legislative-projects/judgments.

⁵Council Regulation (EC) No 2201/2003 of 27 November 2003 Concerning Jurisdiction and the Recognition and Judgments in Matrimonial Matters and the Matters of Parental Responsibility [2003] OJ L338/1 (the Brussels II-bis Regulation); Council Regulation (EC) No 4/2009 of 18 December 2008 on Jurisdiction, Applicable Law, Recognition and Enforcement of Decisions and Cooperation in Matters Relating to Maintenance Obligation [2009] OJ L7/1 (the Maintenance Regulation); Regulation (EU) No 650/2012 of the European Parliament and of the Council of 4 July 2012 on Jurisdiction, Applicable Law, Recognition and Enforcement of Decisions and Acceptance and Enforcement of Authentic Instruments in Matters of Succession and on the Creation of a European Certificate of Succession [2012] OJ L201/107 (the Succession Regulation) etc.

2

Reconciliation of Values in Jurisdiction

I.The Big Picture

A major part of this book is devoted to weighing various objectives and values of private international law. One of the main objectives of this book is to align this plurality of values into an ideal balance. The best way to find this balance is to set priorities and to propose an acceptable course of action in cases where these values conflict. In this section, I do exactly that: I set out the framework of values and their correlation with each other for the entire book.

A.General Rule: Party Autonomy

At the foundation of an ideal jurisdiction system, party autonomy should determine the appropriate forum to handle private disputes. Party autonomy represents the primary expression of private interests in jurisdiction. Enforcing the parties’ will is what conflict of laws rules should strive to achieve.

Evidently, some problems with this approach may be connected with variations in the understanding of party autonomy in light of differing cultural, social, economic and moral values in different states. I address these issues by focusing on two actual jurisdiction regimes (the EU and Russia). I appeal to their theoretical and doctrinal thought to find what party autonomy ultimately means and should mean in the context of their corresponding private international law systems.

I first examine the evolution of party autonomy in the national jurisdictional mechanisms. I chose Germany – as one of the founding Members of the EU and an influential actor during the formation of the Brussels jurisdiction regime. Based on my enquiry into German legal history, I discover that party autonomy to choose forum was already recognised in the Code of Civil Procedure Rules of Germany enacted in 1877. Prior to that, no uniform legislation on civil law and civil procedure existed in Germany. Over 30 different legal systems in the German state featured various rules. In some of these territories (eg, Bavaria), the French civil law traditions influenced local codification efforts. Furthermore, the French Revolution, in proclaiming men free and equal in their rights, and upholding the principle of fair trial and due process of law, had its share of influence on the public officials and scholars in the neighbouring European states, including the German states.

Similarly, Russian civil procedure already envisaged party autonomy to choose a forum in the nineteenth century. This happened first in the commercial context: the Statute of Commercial Procedure of 1832 recognised parties’ choice of (civil) court. It facilitated the option for merchants to utilise local civil courts to settle disputes instead of travelling to commercial courts in distant locations. Later, the Code of Civil Procedure, enacted during the great judicial reform of 1864, recognised party autonomy in choosing jurisdiction in civil matters as well. The drafters...