You may be aware that as the law currently stands, there are a number of European regulations which regulate how Court proceedings can be brought between parties based in different EU member states.

The idea behind the regulations has been to minimise differences between national laws regulating jurisdiction and enforcement of judgments. This has enabled cross-border Court proceedings to take place in a relatively straightforward fashion, with a view to enhancing the smooth running of the internal market.

A summary of the rules as at September 2017 is as follows:-

  • Brussels I (Recast) Regulation (EU) No 1215 regulates where proceedings can be brought in different member states. Proceedings are stayed across the EU member states until the question of jurisdiction is decided.
  • In normal circumstances, proceedings must be brought where a Defendant is domiciled.  There are a number of exceptions to this rule though and claims may sometimes be brought where there is a close connection between the Court and the action or in a particular Court if it would overall enable the administration of justice.
  • The main exception to the Brussels 1 (Recast) Regulation is where the parties have entered into a jurisdiction agreement which states that any disputes should be referred to the Court of a particular member state. Many business contracts contain clauses to this effect (for example, any disputes between the parties should be referred to the Courts of England and Wales).
  • The Recast Regulation also enables judgments to be automatically enforced in other EU member states. Once a judgment is obtained in a particular country, it is possible to apply to the Court for a European Enforcement Order so that the judgment can be enforced in a different member state without formal recognition from its Courts.
  • The Service Regulation (Regulation (EC) No 1393/2007) provides a largely uniform set of rules for serving documents across member states in the European Union (although some countries have opted out of parts of this)
  • The Rome Convention sets out the rules which apply for the choice of law which is to be used in the Courts (e.g. the outcome of a dispute can differ depending on whether English or French law applies). Contracts will often contain a provision regarding choice of law but otherwise a Court will need to determine the law to be applied, largely by looking at the country with the “closest connection” to the claim.
  • There are also a number of other European cross-border processes such as a European Order for payment (enabling a Claimant to obtain an order for payment in a non-contested money claim), a European small claims procedure for claims of less than 2,000 Euros and EU Cross-Border mediation rules.
  • There are different rules for countries in the European Free Trade Area (Norway, Iceland, Liechtenstein and Switzerland).

The European Union (Withdrawal) Bill was presented to Parliament on 13th July 2017. The aim of the Bill is to repeal the European Communities Act 1972 and the intention is that all existing EU legislation will be copied across into UK law as at the date of withdrawal so that the transition is as smooth as possible.

After this date though, the government will be able to amend existing laws and pass new legislation. The government published a partnership paper in August 2017 entitled, “Providing a Cross-Border Civil Judicial Cooperation Framework”.

The government has made it clear in this paper that it will be looking for a reciprocal arrangement which closely mirrors the current system. Overall, the aim will be to maximise certainty for businesses and individuals and to ensure that legal rights can continue to be enforced between parties in the UK and EU Member States.

It is likely that English contract law will still be commonly used even between some parties in the European Union. London is a global centre for the international resolution of legal disputes with an excellent reputation and the government will be keen to preserve and promote this.

Although the outcome of negotiations are unknown at present, the London Solicitors Litigation Association produced a paper in November 2016 entitled, “The Impact of Brexit for London Litigation” in which it set out recommendations for the government in its Brexit negotiations:-

  • To avoid parallel proceedings in different jurisdictions (with associated costs consequences and delays), the government should try to conclude a treaty with the EU which would mirror the provisions of the Brussels I (Recast) Regulation. There would be a provision that the UK would take into account to the decisions of the Court of Justice of the European Union in interpreting the Recast Regulations whilst not being bound by these.
  • After Brexit, the UK should sign up to the Hague Convention on Choice of Court Agreements. The Convention has to date been ratified by the EU, Mexico and Singapore and is an international convention which seeks to preserve the effectiveness of exclusive jurisdiction clauses and provides for reciprocal enforcement of judgments between States.
  • In order to provide continuity with the rules on service, the government should seek to conclude a treaty with the EU using the service agreement which is currently in force between the EU and Denmark as a precedent.
  • In the paper entitled, “Providing a Cross-Border Civil Judicial Cooperation Framework”, the government has confirmed that it is its intention to incorporate into domestic law the Rome I and II instruments on choice of law and applicable law in contractual and non-contractual matters (as recommended by the London Solicitors Litigation Association)

Other commentators have suggested alternative solutions. For example, Dr Pippa Rogerson, University Senior Lecturer at Cambridge University has argued in the New Law Journal (16th December 2016) that it would be better for England and Wales to rely on common law rules rather than to conclude a treaty with the EU mirroring the provisions of the Brussels I Recast Regulations.

This would enable disputes to be heard before the English Courts in any case where the Court is the most appropriate forum. Even if this would not prevent parallel proceedings, it may give the opportunity for a case to be heard in an English Court where it would otherwise be stayed under current provisions.

Although there is likely to be some continuity, the position is far from certain and you may wish to seek legal advice now whilst the current provisions remain unchanged. There is little doubt that there may be a proliferation of legal disputes in the wake of Brexit as parties seek to avoid their contractual obligations in light of changing market conditions and currency fluctuations.

If you would like further advice on European claims generally or would like to discuss a specific case, then please contact Alice Lithgow (nee Anderson) on +44 (0)20 7481 6396 or alice.lithgow@wellerslawgroup.com.