This blog post is by Spencer Turner of 12 King’s Bench Walk.
With ‘exit day’ looming on 31st October 2019 and the very real possibility of a no-deal Brexit, it seems to a be a good time to set out a refresher on jurisdiction and applicable law in the event of a no-deal Brexit.
Jurisdiction: The Current Position
As readers of this blog will no doubt be aware, the rules of civil jurisdiction across the EU are governed by EU Regulation 1215/2012 (‘Brussels Recast’) and, as between EU Member States and EFTA states, the Lugano Convention 2007. The Hague Convention on Choice of Court Agreements 2005 also provides a body of rules which ensure the recognition of exclusive jurisdiction clauses and the enforcement of judgments pursuant to the same; the EU, Mexico, Singapore and Montenegro are all signatories.
Jurisdiction and Enforcement (UK Approach): No Deal
The legislation which comes into force after a no-deal Brexit which will deal with civil jurisdiction is the snappily titled Civil Jurisdiction and Judgments (Amendment) (EU Exit) Regulations 2019 (which can be found here: http://www.legislation.gov.uk/ukdsi/2019/9780111176726/contents).
The intention of the UK government is that, in the event of no deal, Brussels Recast will continue to apply to cases started in England and Wales before ‘exit day’ (regulation 92) and the UK will continue to enforce judgments given in other EU/EEA states where proceedings were initiated before ‘exit day’.
Therefore, if you have obtained a judgment in a court of an EU Member State before or on ‘exit day’ you can enforce that judgment in the English courts under Brussels Recast. In addition, if the EU Member State court was seized of proceedings before or on exit day, Brussels Recast will apply to enforcement proceedings in the English courts for that judgment.
Other than the saving mechanism for cases ongoing when the UK leaves the EU, the Civil Jurisdiction, etc. Regulations 2019 will revoke Brussels Recast and also extinguish the effect of the Lugano Convention.
The consequence of this is that, for cases commenced after ‘exit day’, English common law rules and statutory provisions, particularly Part 6 of the CPR, will apply instead of Brussels Recast or the Lugano Convention in all cases commenced in England and Wales.
It is worth noting that at common law a foreign judgment is not directly enforceable in England and Wales. It will instead be treated as if it creates a debt between parties and a creditor will need to bring an action in the courts for that debt.
Jurisdiction and Enforcement (EU Approach): No Deal
The EU’s approach is different. For proceedings involving a defendant domiciled in the UK and pending in a court of the EU Member States on ‘exit day’, the EU rules on jurisdiction continue to apply.
For proceedings involving a UK-domiciled defendant initiated on or after ‘exit day’ in the EU Member States, the rules on international jurisdiction in EU instruments in the area of civil and commercial law as well as family law no longer apply (unless the EU instruments specifically set the rules of jurisdiction with regard to third countries). International jurisdiction will therefore be governed by the national rules of the EU Member State in which a court has been seized.
As to enforcement, the EU’s published guidance is that Brussels Recast will not apply to any UK judgment obtained before exit day (unless enforcement steps have already taken place in the EU), or any proceedings pending before ‘exit day’. This means that, even if you have commenced (but not concluded) enforcement action in a Member State pre-Brexit, Brussels Recast will no longer apply, and it may be necessary to recommence enforcement proceedings in the Member State pursuant to its domestic enforcement provisions. It is not difficult to imagine a scenario where the judgment of an EU Member State is enforceable in England, but an English judgment is not recognised across the EU.
The government has now confirmed that it will adopt the 2005 Hague Convention on Choice-of-Court Agreements in the event of a no deal Brexit. This is applied in all EU countries except Denmark, and some non-EU states (e.g. Singapore, Mexico). This Convention, unlike the Brussels regime, only provides for the recognition and enforcement of judgments where the parties have concluded an exclusive choice-of-court agreement.
The UK Government has also suggested that it would attempt to join the Lugano Convention post-Brexit but there are a few issues with this:
- The Convention is an agreement between EU and EFTA states. The UK would have to be invited to participate in the Convention pursuant to Article 70 of the same. The UK could not join unilaterally.
- The Convention is not as sophisticated as Brussels Recast. For example, the Convention’s rules still allow for the ‘Italian torpedo’ scenario to arise whereas Brussels Recast allows the court second seized of an action to proceed without having to wait for a court first seized to decline jurisdiction.
In the event of a no-deal Brexit parties seeking to enforce a judgment will need to consider specific local law advice on enforcement in the relevant EU Member State in order to determine the nature and detail of the procedural steps that will likely exist.
Applicable Law: No Deal
The UK government will deal with the applicable law legislation in:
The Law Applicable to Contractual Obligations and Non-Contractual Obligations (Amendment etc.) (EU Exit) Regulations 2019 (which can be found here: http://www.legislation.gov.uk/ukdsi/2019/9780111180785/contents).
In essence, this statutory instrument ensures that Rome I and Rome II are retained so as to operate effectively as domestic UK law in the event of a no-deal Brexit.
It has been confirmed that the UK courts will apply the retained Rome I and Rome II Regulations to determine applicable law in relation to contractual and non-contractual obligations. In general, Rome I and Rome II do not rely on reciprocity to operate and so the UK is free to continue to apply the rules of Rome I and Rome II.
Whilst the EU has not issued advice on applicable law rules, both Rome I and Rome II will continue to apply in EU Member States and their courts after a no-deal Brexit.