REPORT on the Initiative of the Kingdom of the Netherlands with a view to the adoption of a Council Regulation amending Regulation (EC) No 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters
(14363/2002 – C5‑0590/2002 – 2002/0824(CNS))
9 July 2003 - *
Committee on Legal Affairs and the Internal Market
Rapporteur: Diana Wallis
PROCEDURAL PAGE
By letter of 2 December 2002 the Council consulted Parliament, pursuant to Article 67 of the EC Treaty, on the Initiative of the Kingdom of the Netherlands with a view to the adoption of a Council Regulation amending Regulation (EC) No 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (14363/2002– 2002/0824(CNS)).
At the sitting of 16 December 2002 the President of Parliament announced that he had referred the proposal to the Committee on Legal Affairs and the Internal Market as the committee responsible and the Committee on Employment and Social Affairs for its opinion (C5‑0590/2002).
The Committee on Legal Affairs and the Internal Market appointed Diana Wallis rapporteur at its meeting of 20 February 2003.
The committee considered the Initiative of the Kingdom of the Netherlands at its meetings of 20 February 2003, 10 June 2003 and 8 July 2003.
At the last meeting it adopted the draft legislative resolution unanimously.
The following were present for the vote Giuseppe Gargani (chairman), Ioannis Koukiadis (vice-chairman), Ulla Maija Aaltonen, Paolo Bartolozzi, Ward Beysen, Michel J.M. Dary, Bert Doorn, Francesco Fiori (for Rainer Wieland pursuant to Rule 153(2)), Janelly Fourtou, Marie-Françoise Garaud, Evelyne Gebhardt, José María Gil-Robles Gil-Delgado, Malcolm Harbour, Lord Inglewood, Hans Karlsson (for Maria Berger), Kurt Lechner, Klaus-Heiner Lehne, Sir Neil MacCormick, Toine Manders, Manuel Medina Ortega, Anne-Marie Schaffner, Astrid Thors (for Diana Wallis), Marianne L.P. Thyssen, Joachim Wuermeling and Stefano Zappalà..
The Committee on Employment and Social Affairs decided on 15 January 2003 not to deliver and opinion.
The report was tabled on 9 July 2003.
DRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION
on the Initiative of the Kingdom of the Netherlands with a view to the adoption of a Council Regulation amending Regulation (EC) No 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (14363/2002 – C5‑0590/2002 – 2002/0824(CNS))
(Consultation procedure)
The European Parliament,
– having regard to the Initiative of the Kingdom of the Netherlands (14363/2002)[1],
– having regard to Article 61(c) of the EC Treaty,
– having regard to Article 67 of the EC Treaty, pursuant to which the Council consulted Parliament (C5‑0590/2002),
– having regard to Rule 67 of its Rules of Procedure,
– having regard to the report of the Committee on Legal Affairs and the Internal Market (A5‑0253/2003),
1. Rejects the initiative of the Kingdom of the Netherlands;
2. Calls on the Kingdom of the Netherlands to withdraw the initiative;
3. Calls on the Commission to give proper consideration to the underlying issue, report back to Parliament and, if necessary, produce a proposal for amending legislation;
4. Instructs its President to forward its position to the Council and Commission.
- [1] OJ C 311, {14/12/2002}14.12.2002, p. 16.
EXPLANATORY STATEMENT
Introduction
The Netherlands has proposed an initiative whereby Article 20 of Council Regulation (EC) No 44/2001 on jurisidiction and the recognition and enforcement of judgments in civil and commercial matters would be expanded to include a new paragraph 1a:
"1a. Proceedings brought by an employer to terminate a contract of employment may also be brought in the courts for the place where the employee habitually carries out his work or, if the employee does not habitually carry out his work in any one country, in the courts for the place where the business which engaged the employee is situated."
The proposal is based on the following grounds:
"(3) Due to difficulties that have arisen in trans-border labour relationships, it has become necessary to amend Article 20 of Regulation (EC) No 44/2001. According to the labour law of some Member States, as regards the termination of an employment contract, employers have the option to petition for judicial annulment instead of a dismissal, and in some cases, judicial annulment is mandatory. Judicial annulments offer advantages for both the employee and the employer.
(4) Considering the principle of free movement of workers and with a view to improving the conditions for judicial annulments, the employer is given the option to bring proceedings in the courts for the place where the employee habitually carries out his work. These courts have a particularly close link to the dispute, the point of connection generally being the same for the determination of the applicable law, and generally have the best possibilities to obtain information".
The existing version of Article 20 reads as follows:
"Article 20
1. An employer may bring proceedings only in the courts of the Member State in which the employee is domiciled.
2. The provisions of this Section shall not affect the right to bring a counter-claim in the court in which, in accordance with this Section, the original claim is pending."
Article 5 of the original Brussels Convention reads:
"A person domiciled in a Contracting State may, in another Contracting State, be sued:
1. ... in matters relating to individual contracts of employment, this place is that where the employee habitually carries out his work, or if the employee does not habitually carry out his work in any one country, the employer may also be sued in the courts for the place where the business which engaged the employee was or is now situated;"
The origin of the proposed initiative
This can be traced back to a series of questions put by a Netherlands Member of Parliament to the Minister of Justice on 6 March 2002. The concern seems to be that the Brussels I Regulation would impede transfrontier working in that foreign courts might have to adjudicate on Netherlands employment law in that it provides in Article 20 that a employer may bring proceedings only in the courts of the Member State where the employee is domiciled. The initiative would give the employer the option of terminating a contract of employment in his national courts.
In point of fact, the reason why this problem has arisen is that numerous Netherlands nationals reside in Belgium and Germany, yet continue to work in the Netherlands. Accordingly, it is considered that the Brussels I Regulation has the perverse result that Dutch employers have to bring proceedings relating to Netherlands nationals' contracts of employment governed by Netherlands law in another Member State merely because the employees in question have chosen to reside over the border in Belgium or Germany. It is argued that Netherlands employment, social security and tax law differs greatly from that of Belgium and Germany and that the courts of the latter countries could find difficulty in applying Netherlands law, to the detriment of Netherlands employers and possibly also the employees concerned. It is considered that something should be done to rectify this situation which was surely not intended by the legislator.
The Commission contends that the initiative runs counter to the basic principle incorporated into Regulation No 44/2001 to allow the employer to sue the employee only in the Member State of the latter’s domicile and thus to protect the weaker party in a particularly sensitive contractual relationship. Recital 13 in the preamble to Regulation No 44/2001 states that “in relation to insurance, consumer contracts and employment, the weaker party should be protected by rules of jurisdiction more favourable to his interests than the general rules provided for”. However, it may well be that, in this particular case, it is not even necessarily in the employee's interest for his or her employer to have to bring proceedings in the country of his or her domicile. Consequently, the Commission is asked to reconsider this question, bearing in mind however that the basic principle of protecting the weaker party should be retained. One possible solution might be to provide a qualified definition of the term "domicile"; another might be to require the employee to consent to the bringing of the proceedings in the Netherlands.
The Commission further points out that the initiative comes only 9 months after the entry into force of the Regulation. Although questions have been put in this House and in the Netherlands Parliament concerning the present Article 20, the Commission considers that the report that it has to present on the application of the Regulation pursuant to its Article 73 no later than five years after its entry into force might be a more timely occasion for reflection on amendments such as that suggested by the Netherlands. For her part, your rapporteur urges the Commission to address this question seriously now that it has been brought to its attention in order (a) to examine whether problems have arisen or are likely to arise and (b) to consider proposing amending legislation.
Whatever the merits of the various arguments, however, it would appear that the Netherlands initiative is not admissible now that the Treaty of Nice has entered into force.
Admissibility of the initiative
The initiative is based on Articles 61(c) and 67(1) of the EC Treaty.
Article 61(c) reads as follows:
In order to establish progressively an area of freedom, security and justice, the Council shall adopt:
...
(c) measures in the field of judicial cooperation in civil matters as provided for in Article 65;
Article 65, to which it refers, provides:
Measures in the field of judicial cooperation in civil matters having cross-border implications, to be taken in accordance with Article 67 and in so far as necessary for the proper functioning of the internal market, shall include:
(a) improving and simplifying:
— ...
— ...
— the recognition and enforcement of decisions in civil and commercial cases, including decisions in extrajudicial cases;
Lastly, Article 67 now reads:
1. During a transitional period of five years following the entry into force of the Treaty of Amsterdam[1], the Council shall act unanimously on a proposal from the Commission or on the initiative of a Member State and after consulting the European Parliament.
...
5. By derogation from paragraph 1, the Council shall adopt, in accordance with the procedure referred to in Article 251:
— ...
— the measures provided for in Article 65 with the exception of aspects relating to family law.
As we are all aware, Article 251 does not provide for a Member State initiative. Moreover, Article 67(5), albeit not a masterpiece of the draftsman's art, is clearly intended to enter into effect with the entry into force of the Treaty of Nice and no transitional provisions are provided for.
Conclusion
The initiative of the Kingdom of the Netherlands is no longer provided for in the Treaty and must be rejected. Nevertheless, the Commission is called up to look into the underlying problem, report back to Parliament and, if necessary, produce a proposal for amending legislation.
- [1] I.e. until 1 May 2004.