Trans-Border Litigation after Brexit

Jane Lambert

According to Paper 4 (Civil Jurisdiction and Judgments) of the Bar Council's Brexit Papers, "England and Wales is the leading centre for dispute resolution worldwide." The legal sector generated £3.3 billion of revenue in 2015. The authors of that paper observe:

"That fact that England and Wales is such a significant hub for international dispute resolution has important knock-on advantages for the UK as a whole. There is, of course, the fee income and tax revenues which flow from the sector. However, there are other advantages too. Given the widespread acceptance of English law as an effective law for governing commercial relationships, and the choice of the English courts as a corollary of this, UK parties can often negotiate that English law be the law which governs their commercial relationships with international parties and that their disputes will be resolved in the English courts. This gives those UK parties the “home advantage” of being able to use a law and courts with which they are familiar, even though they are trading internationally."

This country's pre-eminence as a centre for dispute resolution results from having reciprocal arrangements with a large number of countries around the world including, in particular, the other EU member states. 

The Bar Council's Brexit paper warns that the pre-eminence of England and Wales will be damaged if appropriate steps are not taken to ensure that the jurisdiction of the English courts and the enforcement of English judgments are protected.  At present, the courts' jurisdiction and the enforcement of their judgments are assured by Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters,  That regulation will cease to apply to the UK when it leaves the European Union except in so far as it may be preserved for an implementation period by the proposed withdrawal agreement or incorporated into English law by s.3 of the European Union (Withdrawal) Act 2018.

A joint paper by the Department for Business, Energy and Industrial Strategy and the Department of Justice which was published on 13 Sept 2018 and entitled Handling civil legal cases that involve EU countries if there’s no Brexit deal state that  in the absence of a deal with the EU, the following rules will cease to apply to the UK in addition to Regulation 1215/2012:

• The Enforcement Order, Order for Payment and Small Claims Regulations: which establish EU procedures for dealing with, respectively, uncontested debts and claims worth less than EUR5,000
• The EU/Denmark Agreement: which provides rules to decide where a case would be heard when it raises cross-border issues between Denmark and EU countries, and the recognition and enforcement of civil and commercial judgments between the EU and Denmark, and
• The Lugano Convention: which is the basis of our civil judicial relationship with Norway, Iceland and Switzerland: This would not prevent us from applying to re-join the Lugano Convention in our own right at a later date.

Regulation 1214/2012, the EU Denmark Agreement and Lugano Convention determine the jurisdiction in which a case is to be brought.   Those instruments also require courts in other countries to stay proceedings once an action in another court begins and to enforce any judgment of that court as though it were a decision of their own.

When those instruments cease to apply to the UK there will be nothing to prevent forum shopping,  actions in the same matter proceeding in the UK and an EU member state, a proliferation of anti-suit injunctions and delays and complications on enforcement.  As courts in the UK will lose the right to refer preliminary issues to the Court of Justice of the European Union, exclusive jurisdiction clauses may be disregarded.  All this is likely to increase costs and give rise to uncertainty that did not exist before.  Businesses do not like such uncertainty. It is not surprising that the Bar Council has heard of parties being advised not to choose English law to govern their contracts where previously it would have been an almost automatic choice or of litigation being started in other member states that would otherwise have begun in London

In intellectual property litigation, these difficulties will be compounded by courts in the UK ceasing to be EU trade mark and Community design courts and a gradual divergence of trade mark and design law.  Also, it is hard to see how the UK could remain a party to the Unified Patent Court Agreement. This matters because the strength of the local protection of brands, design and technologies is one of the factors that investors take into account when deciding where to locate and even maintain manufacturing or distribution facilities.

Other reasons for English preeminence were the Privy Council as the court of last resort for countries in the Commonwealth and the use of the English language.  The importance of the Privy Council as the hub of the common law world has diminished as more and more countries of the Commonwealth have abolished the right of appeal to London.  As for the use of English, the Netherlands has already established a commercial court in Amsterdam in which proceedings can be conducted in English (see Jane Lambert  An English Speaking Commercial Courts in the Netherlands 28 Jan 2017 NIPC News) and there are reports that other countries are doing the same (see Kate Wilson Paris opens English speaking court 28 Feb 2018 Economia).

The Bar Council has urged the government to enter into an agreement based on the Denmark-EU Jurisdiction Agreement and also to sign and ratify the Lugano II Convention and the 2005 Hague Convention on the Choice of Court Agreements,  According to the joint paper 

"In the event of no deal, we would take the necessary steps to formally re-join the 2005 Hague Convention on Choice of Court Agreements in our own right (we currently participate because of our EU membership). It is anticipated that the convention would come in to force across the UK by 1 April 2019,"

If there us an implementation period pursuant to a withdrawal agreement it is hoped that British negotiators will use the time to negotiate agreements similar to Lugano and Danish agreement.  The government has already indicated that it aims to do so in paragraph 1.7.7. of its white paper, The future relationship between the United Kingdom and the European Union.

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