In this comprehensive analytical article, John-Paul Swoboda and Spencer Turner set out their view of the current position and the implications of Brexit for the future of cross-border civil litigation in the UK.
In Bulmer Ltd v Bollinger[1] Lord Denning spoke of the European Communities Act 1972 as ‘like an incoming tide. It flows into the estuaries and up the rivers. It cannot be held back. Parliament has decreed that the Treaty is henceforward to be part of our law. It is equal in force to any statute’.
In the four decades that followed, the Brussels I (Recast) Regulation, the Rome I and Rome II Regulations, the Service Regulation, and the Lugano Convention revolutionised cross-border litigation and shaped the UK’s civil justice system. As was said by the authors of Dicey, Morris & Collins[2] in the most recent edition of ‘Conflict of Laws’ ‘[b]y far the most significant source of the English conflict of laws … is European Union law’.
On 24 December 2020 it became clear that the tide had turned. The conclusion of the Trade and Cooperation Agreement[3] between the UK and the EU did not include any provisions on judicial cooperation in civil matters (as we discussed here). On 31 December 2020, the UK’s participation in large parts of the EU legal order ended and a new period for private international law began.
In this post we will offer some thoughts and consider the implications from our perspective as travel and personal injury practitioners.
Existing Claims
During the Implementation Period, the UK courts continued to apply EU Regulations and Directives. For proceedings “instituted” before 1 January 2021, art. 67 of the Withdrawal Agreement[4] confirms that the provisions of Brussels I Recast will continue to apply.
What exactly does “instituted” mean? It seems that this is intended to mirror art. 32(1)(a) of Brussels I (Recast). This provision sets out the time when a court “shall be deemed to be seised” of a claim. The relevant time is when the “document instituting the proceedings” is “lodged” with the court, provided that the claimant proceeds to serve in the correct way. While the concept of “instituting” proceedings is repeated at various places throughout the Regulation, it is absent from the CPR.
What about “lodging” the document with the court? The main textbooks (and many of the authorities) suggest that, in England and Wales, a civil claim is “lodged” with the court when it is formally issued. This is also the date when the claim is deemed to have “started” under CPR r. 7.2. Entering the date of issue on the claim form fulfils the art. 32(2) requirement for the court to “note … the date of the lodging of the document instituting the proceedings”. This would also correspond with the new legislation allowing service without permission for proceedings issued but not served by 31 December 2020 (discussed in detail here).
But we can foresee litigation concerning whether physical delivery of the claim form to the court office is enough for it to be “lodged”.
Article 67 of the Withdrawal Act also provides that the provisions of Brussels I Recast will continue to apply to proceedings not instituted prior to 31 December 2020 but which are ‘related to such proceedings’ which were instituted prior to that date. The meaning of ‘related to such proceedings’ will be determined by reference to the lis pendens provisions found at article 29 to 31 of Brussels I Recast.
The final, and a very important, point worth mentioning with regards to existing claims made prior to 1 January 2021 is that art. 67(2) of the Withdrawal Agreement provides for the continued recognition and enforcements of judgments in claims instituted before the end of the transition period.
Applicable Law
The provisions of the Rome I and Rome II Regulations have been retained in English law by the Law Applicable to Contractual Obligations and Non-Contractual Obligations (Amendment etc.) (EU Exit) Regulations 2019[7] and so personal injury practitioners remain in familiar territory when dealing with the applicable law in cross-border claims post-transition. It bears repeating that whilst matters of evidence and procedure fall outside of the scope of the applicable law, service and the interruption of a limitation period falls to be dealt with by the law applicable to the substantive claim[8].
Interestingly, the EU Commission has announced a review into the application of Rome II in Member States. The BIICL has been selected to conduct the study[9] which will analyse all areas covered by Rome II as well as tackling ‘cutting edge’ legal questions on cross-border human rights violations and the interplay between Rome II and data protection. The review is currently ongoing and is expected to be completed in April 2021. The outcome of that review will provide practitioners with a fascinating insight into firstly, how applicable law rules might need to develop to interact with the legal challenges in the future and secondly, whether the UK will continue to adopt the EU model on applicable law or choose to depart from it. There is no formal mechanism for the UK to adopt an updated version of Rome II should the EU decide to update the Regulation (although this could be introduced through legislation).
Jurisdiction
For claims commenced on or after 1 January 2021 the Brussels I (Recast) Regulation will no longer be relevant to questions of jurisdiction, which will instead generally be determined by applying the existing common law provisions. There is an exception for consumer contracts and employment contracts, which we discuss below.
In other claims, a claimant will need to apply for permission to serve out of the jurisdiction under CPR r. 6.36 and satisfy a court that:
- There is a good arguable case that the claim falls within one of the grounds of jurisdiction under paragraph 3.1 of Practice Direction 6B;
- There is a serious issue to be tried on the merits of the case; and
- In all of the circumstances, England is clearly the appropriate forum for the trial of the dispute and the court ought to exercise its discretion to permit service of the proceedings out of the jurisdiction.
We considered the new rules on service out of the jurisdiction in detail here.
Of particular importance and interest for personal injury practitioners is the tort ‘gateway’ and readers of this blog will no doubt have been following Brownlie (No. 2)[10] which was recently heard before the Supreme Court. We blogged about the Court of Appeal judgment here.
One of the issues for the Supreme Court to determine is whether the Court of Appeal was wrong to hold that the jurisdictional gateway for claims in tort under CPR 6BPD 3.1(9)(a) was satisfied in Mrs Brownlie’s case. The Court of Appeal was split on whether the tort gateway could be triggered where consequential damage was suffered in the UK.
This followed the obiter view of the majority of the Supreme Court in Brownlie v Four Seasons Holdings International [2017] UKSC 80, which we discussed here.
McCombe LJ agreed with the majority view of the Supreme Court, as did Underhill LJ. Arnold LJ’s dissenting judgment in the Court of Appeal concluded that what must be shown for the purposes of the tort gateway is that direct damage was sustained in the jurisdiction, which is much closer to a determination of “where the harmful event occurred” (as under the European rules).
We would be foolhardy to predict the view of the Supreme Court on the matter, but what is clear is that the split in the Court of Appeal shows the controversy in the precise scope of the tort gateway. We will await the outcome of Brownlie (No. 2) with interest and we will be blogging on the judgment as soon as it is handed down. In the meantime, the arguments can be viewed on the Supreme Court website here.
We expect that the revival of the common law rules in the era of post-Brexit cross-border litigation will lead to more arguments about forum conveniens, which will likely become an important tool for foreign defendants. The starting point for any forum argument is Spilliada Maritime Corp v Cansulex Ltd[11]. The ‘basic’ principle was expressed by the House of Lords as follows:
a stay will only be granted on the ground of forum non conveniens where the court is satisfied that there is some other available forum, having competent jurisdiction, which is the appropriate forum for the trial of the action, i.e. in which the case may be tried more suitably for the interests of all the parties and the ends of justice.
The forum conveniens argument will give defendants the scope to ask the court to take into account a wide range of factors in determining whether the courts of England and Wales are the proper place for litigation to take place. The court’s approach in determining the correct forum will be highly fact specific exercise and will no doubt cause parties and the courts to expend significant time and cost in determining such applications. In Vedanta v Lungowe[12] Lord Briggs lamented the impact that jurisdictional challenges had on the resources of the court. We expect this issue will only become more acute in this post-Brexit world, which was an issue Arnold LJ was plainly concerned about when deciding the breadth of the tort gateway in Brownlie (No. 2 ).
The return to the common law regime on jurisdiction also revives the pre-West Tankers[13] position and the English courts will again be able to grant anti-suit injunctions in a wider variety of situations. The anti-suit injunction is in summary a means by which the English courts can restrain a party from commencing or continuing foreign proceedings.
Anti-suit injunctions, albeit relatively rare in the personal injury world pre-Brexit, are very much alive and kicking (we discussed two recent examples here). From a purely legal analysis, they are of wider application than was previously the case. What is clear is that there is scope for a new and complex dimension to the type of “torpedo” tactics we recently blogged about. We will blog about this interesting topic separately in the future.
The Lugano Convention
The end of the transition period brought with it the UK’s exit from the Lugano Convention. The UK Government has made clear its desire to join the Lugano Convention and, on 8 April 2020, made its application to accede to the Convention as an independent contracting state.
Article 72 of the Convention requires unanimous support from all of the current contracting parties to enable the UK to accede. Switzerland, Norway and Iceland have already announced their support, but the EU and Denmark are yet to give their consent. It is not yet known what decision the EU will take on UK accession, but it is thought that the Commission has advised Member States that there are clear grounds to reject the UK’s accession[14]. Article 72(3) of the Convention requires contracting states to ‘endeavour’ to give their consent (or otherwise) within a year of the accession request being made, so more news is expected in the Spring. In any event, the existing rules will continue to apply if and until the UK accedes to the Convention.
This leads to some interesting dilemmas for practitioners. In some cases, it may be preferable to wait and hope that the UK’s accession to the Lugano Convention is agreed (although this may turn out to be a very long wait). In other cases, limitation pressures or the need to obtain an urgent interim remedy will mean that parties have to rely on the common law regime. Access to Lugano would, bearing in mind the close resemblance to Brussels Recast, provide an existing and well-known cross-border framework across Europe on jurisdiction and the recognition and enforcement of judgments.
The UK has the benefit to the Hague Convention 2005 on Choice of Court Agreements. The Hague Convention 2005 is focused on ensuring that exclusive jurisdiction clauses in favour of Contracting States are respected. Article 2(j) sets out that the 2005 Convention does not apply in claims for personal injury brought by or on behalf of natural persons and therefore it will be of little use to personal injury practitioners.
It is worth reflecting on the UK Government’s proposal on civil justice and cooperation in the 2018 White Paper ‘The Future Relationship between the United Kingdom and the European Union’[15] which set out that it would:
[seek] to join the Lugano Convention, and exploring a new bilateral agreement with the EU on civil judicial cooperation, covering a coherent package of rules on jurisdiction, choice of jurisdiction, applicable law and recognition and enforcement of judgments in civil, commercial, insolvency and family matters
A failure to reach the stated aim significantly increases the risk of procedural battles and blunders, increased costs for parties, and, most disconcertingly, difficulties with recognition and enforcement. Whilst the certainty of the old EU regime is gone the flexibility of the common law regime is revived.
The problem however remains that no matter how good the common law regime is, if judgments in England and Wales cannot be enforced in the defendant’s home jurisdiction, any victory by a claimant in the courts of England and Wales will be pyrrhic. Close attention will need to be paid as to the practicalities of enforcement in the relevant foreign jurisdiction before cross-border litigation is commenced in England and Wales. Further, as discussed below in the context of RTAs, ensuring valid and effective service will not necessarily be easy or simple.
Consumer and Employment Contracts
In the case of consumer and employment contracts, there has been an amendment to the Civil Justice and Jurisdiction Act 1982 which are found in sections 15B to 15E which effectively mirror the provisions on consumer and employment contracts found in Brussels I (Recast). Changes to the CPR mean that service out of the jurisdiction can be effected in these cases without permission (see further here).
Road Traffic Accidents
Odenbreit[16] allowed an injured person with a direct claim against an insurer to bring the claim in the injurerd person’s own national court where the law applicable to the non-contractual obligation provided a direct right of action or if the law relating to the insurance contract provided one.
The post-Brexit position in relation to road traffic accidents abroad is now governed by Part 6 of the CPR and the common law. The corollary is that where a UK resident suffers losses as a result of a road traffic accident abroad, there will be numerous obstacles in bringing the claim.
Firstly, a potential claimant will have to seek to establish jurisdiction against the tortfeasor and/or the foreign insurer via Part 6 of the CPR, which means not only establishing that the claim can pass through the tort gateway but also that England is the proper place for the claim to be heard. Apart from the outstanding question of how Brownlie (No. 2) will be decided, there is an interesting question about whether future direct claims against foreign insurers are claims falling under the tort gateway at all (a question for a future blog).
Assuming that these issues are overcome, there remain a number of factors which may make establishing the jurisdiction of the English courts difficult in foreign road traffic accidents. For example, the fact that foreign law may apply to an accident by virtue of art. 4(1) of Rome II, that witnesses to the accident may be based abroad, that damage was sustained abroad, and that police investigations into the accident may have taken place aboard are all factors which point away from an English court accepting jurisdiction.
However, each case will of course turn on its own merits and given that a decision as to whether England is the proper place for a claim to be heard is a discretionary judgment, two judges may realistically reach opposite conclusions on the same facts. Notwithstanding the fact specific nature of forum conveniens decisions (and subject to the outcome in Brownlie (No. 2)), claims which are likely to be stronger candidates for England being the proper place are those where English law is the proper law by Article 4(2) or 4(3) of Rome II, high value quantum only claims where there is continuing future loss, or where there is at least one English defendant.
Secondly, service is now a much thornier issue for claimants. Previously Spedition Welter GmbH v Avanssur SA [17] arguably allowed claimants to serve UK claims representatives of foreign insurers. The position following the end of the implementation period is that there are no requirements for insurers from any Member State to have a claims representative based in the UK, which means that it may become necessary for parties to serve on tortfeasors and/or insurers outside of the jurisdiction. Some insurers may remain open to accepting service within the jurisdiction, particularly to reduce the costs associated with jurisdictional challenges.
Section 1139(2) of the Companies Act 1006 provides that a document may be served on a company whose particulars are registered under section 1046 of the Companies Act 2006 by leaving it at or sending it by post to any place of business of the company in the UK. CPR r. 6.9(2) permits service on any place of business of the company within the jurisdiction in certain circumstances. There will, we expect, be plenty of scope for argument and inevitable litigation surrounding attempts to serve foreign based defendants within the jurisdiction, particularly where insurers have retained representatives in the UK.
Alli-Balogun v On the Beach[18] contains a helpful analysis of the approach that a court is likely to take when considering complex issues of service. It can be read here. A full summary of that decision is best saved for another blog post, but the concluding remarks of Bourne J are interesting. In allowing alternative service under CPR r. 6.15 he said:
‘Making the order will avoid significant delay and expense in the additional claim. It may also assist in avoiding further delay in the resolution of the underlying claim by the child. In my judgment, further litigation on the subject of whether the additional claim has been served is not in the interests of justice.’
As a final comment on jurisdiction, CPR rr. 11(4) and (5) make clear that a defendant who wishes to dispute the court’s jurisdiction or argue that the court should not exercise its jurisdiction must file an acknowledgement of service, tick the box disputing jurisdiction, and make the application to dispute jurisdiction within 14 days of filing the acknowledgement of service. Failure to do so will be treated as having accepted that the court has jurisdiction to try the claim.
Thirdly, enforcement of any judgment is also now problematic. Post-transition recognition and enforcement will now depend upon the local rules within each country. This will likely require tailored legal advice from lawyers within the jurisdiction in which recognition and enforcement is being sought. The Law Society issued some useful advice on this which we blogged about here.
No discussion on foreign road traffic accidents would be complete without a consideration of the changes to untraced and uninsured claims. The Motor Vehicles (Compulsory Insurance) (Amendment etc.) (EU Exit) Regulations 2019 has removed the ability of UK residents injured by untraced or uninsured drivers to make a claim through the MIB. As the MIB’s guidance[19] sets out:
UK-based victims of accidents abroad have to make their claims direct to the foreign insurer or, in the event of an accident with an uninsured or “hit-and-run” driver, to the foreign equivalent of MIB. MIB is no longer able to consider claims relating to accidents caused by uninsured or hit-and-run drivers abroad. Where such accidents occurred before 31 December 2020, MIB will consider a claim only if proceedings were brought before that date.
The MIIC will continue to provide guidance and the contact details of the relevant country’s guarantee fund moving forward.
Conclusion
It remains to be seen if the return to the common law rules will be permanent or merely a gap until the UK accedes to the Lugano Convention. We would only warn that those waiting for accession may be waiting for a long time. In so far as they were not already familiar with the common law rules (after being wrapped in the warm blanket of certainty when litigating under Brussel I (Recast)), parties will need to refamiliarise themselves with the flexible, but less certain, common law rules when dealing with what would previously have been Brussels cases, and the significant changes that the end of the Implementation Period bring with it.
Perhaps the biggest culture change needed relates to the overwhelming need for consideration of enforcement and recognition of English judgments in the EU as a first step in cross-border litigation.
[1] [1974] CH 401, 418F
[2] Dicey, Morris & Collins The Conflict of Laws (15th edn) at 10-19
[3] https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/948119/EU-UK_Trade_and_Cooperation_Agreement_24.12.2020.pdf
[4]https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/785114/11_March_WA_-_WEB_VERSION.PDF
[5] Article 216 of the Withdrawal Agreement
[6] [1980] EUECJ R-56/79
[7] https://www.legislation.gov.uk/uksi/2019/834/contents/made
[8] Pandya v Intersalonika General Insurance Co SA [2020] EWHC 273 (QB)
[9] https://www.biicl.org/projects/com-study-on-the-rome-ii-regulation
[10] UKSC 2020/0164
[11] [1987] AC 460
[12] [2019] UKSC 20
[13] Case C-185/07
[14] https://www.ft.com/content/d3cf6d9f-2e2d-4af9-a550-91e476723ea2
[15]https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/786626/The_Future_Relationship_between_the_United_Kingdom_and_the_European_Union_120319.pdf
[16] FBTO Schadeverzekeringen NV v Jack Odenbreit Case C463/06
[17] C306/12
[18] [2021] EWHC 83
[19] https://www.mib.org.uk/driving-abroad-eu-exit/making-a-claim-road-traffic-accidents-abroad/
One Comment