A new era for cross border disputes?


31 August 2017

The UK Government recently published its position paper concerning civil judicial cooperation once the UK leaves the EU. This vital topic is far from being one for legal purists. It will directly affect cross-border disputes and consumer claims, and it underpins cross EU trade arrangements.

 

The current legislative framework

Under the current EU legislative framework, civil judgments given in one EU member state are automatically recognised and enforceable in any other EU member state. The existing framework comes from a series of EU Regulations which will cease to automatically apply to the UK after Brexit. The UK Government has previously indicated its intention unilaterally to adopt these regulations into English law on and after exit day. However, there has been some concern that the UK cannot simply adopt EU legislation back into UK law in its current form. Some of these concerns can be alleviated by rewriting or amending legislation once it is on the UK’s statute book. But other concerns, for example where legislation is not designed to be used or enforced by a non-EU member state, have left EU lawyers dealing with cross-border EU disputes with a large question mark hanging over the efficacy of post-Brexit reciprocal recognition and enforcement arrangements. Whilst the UK can agree to recognise and enforce judgments from other EU member states after Brexit, absent any agreement to the contrary, it cannot be assured that UK judgments will receive like treatment in the remaining EU27.

 

A close cooperative relationship

Aiming to address these issues, the Government’s position paper “Providing a cross-border civil judicial co-operation framework” sets out the UK’s vision for a “close cooperative relationship between the legal systems of the UK and the EU” which will be based on the “unprecedented position of close integration” already enjoyed by the parties. The UK will “seek an agreement with the EU that allows for close and comprehensive cross-border civil judicial cooperation on a reciprocal basis, which reflects closely the substantive principles of cooperation under the current EU Framework”. That demonstrates a clear intent, but it is uncertain how far it can be achieved in the current negotiations.

In respect of governing law, the UK intends to adopt into English law the existing Rome I and Rome II Regulations. In respect of choice of court, the UK will seek a new agreement which deals with jurisdiction and the enforcement of judgments in relation to disputes after withdrawal date. But, if this is not possible, in an annexe to the paper, it proposes that the current arrangements in these two areas will be operated for judgments given and claims commenced prior to the withdrawal date. The jurisdiction and enforcement regimes for future cases if there is no agreement are not addressed. It is in this area that the position of consumers may be affected. The question of where a consumer may sue, or be sued by, a supplier may well affect the cost and efficacy of litigation.

 

Future reciprocity and judicial cooperation

Outside of the Brexit negotiations, what can the UK do regarding future reciprocity and judicial cooperation? One possible option lies in the multi-lateral treaties to which the UK is currently a signatory (by virtue of its membership of the EU). These treaties, including several Hague Conventions and the Lugano convention provide for judicial cooperation on a wider scale than just within the EU. The UK’s position paper makes a public commitment to continuing to be an active and supportive members of the Hague Conference which applies to 82 countries worldwide (including all EU member states) and to continue to participate in the Lugano Convention which forms the basis for judicial cooperation between the EU and EFTA countries (Norway, Switzerland and Iceland). The position paper suggests that the UK will “continue to be an active and supportive member” of the Hague Conference – although this ignores the fact that it is only a signatory by virtue of its membership of the EU. To continue to participate in the Hague Conventions or the Lugano Convention, the UK would need to seek independent membership – which the position paper stops short of stating explicitly, but must be what is intended. It is worth noting that the EU would need to agree to the UK’s accession in its own right to the Lugano Convention. It is questionable whether the EU would give this consent if it is not prepared to agree these same principles within the Withdrawal Agreement itself.

Independent accession to the Hague and Lugano conventions would at least offer more predictability. The various conventions would provide a framework for, amongst other things, service of documents abroad, taking of evidence, choice of court agreements and recognition and enforcement of judgments. Much is inevitably dependent on the progress of the current negotiations.

The best advice at present, if a cross-border claim has arisen, is to make it using the current machinery rather than wait for the negotiators to finish their task.

 

For more information please contact:

Ian Gascoigne, Partner
e: iangascoigne@eversheds-sutherland.com
t: +44 207 919 0593
Hannah Nichols, Principal Associate Professional Support Lawyer
e: hannahnichols@eversheds-sutherland.com
t: +44 115 943 7614