No-deal Brexit guidance: Civil and commercial co-operation
The Law Society has published guidance for solicitors that highlights the changes in civil and commercial co-operation that will occur should the UK leave the EU without having reached an agreement with the EU.
In this scenario, the EU and UK will have failed to sign a withdrawal agreement (governing the terms of the UK’s departure from the EU) and an agreement governing the future relationship between the two parties.
The UK will immediately leave the EU’s institutional structures without a transition period. In many areas, cooperation between the UK and EU will cease, and the applicable legal regime in many practice areas will change.
In this article we consider the loss of several civil judicial co-operation mechanisms such as Brussels I Regulation, the Lugano Convention, Insolvency Regulation and other civil co-operation mechanisms including the Motor Insurance Directive.
Key points to consider in relation to civil justice:
- National law rules will apply to this area of the law in the UK and in EU/EEA member states (unless otherwise stated below), as all reciprocal elements of EU law will cease to have effect. In the UK, they will be repealed by the UK government.
- In some cases, bilateral treaties and conventions pre-dating EU member state may exist between the UK and EU member states. To ascertain whether this is the case, you may need to consult the national law of the state concerned. You may need to contact a local lawyer in that country
- Where the parties have an exclusive choice of court agreement, the UK will accede to the 2005 Hague Convention; the UK has lodged its instrument of accession, Hague 2005 will enter into force as soon as possible after exit and it will apply to choice of court agreements concluded on or after the entry into force. This will be applied between the UK and EU/EEA states, and other states parties to that Convention.2 UK Courts will continue to apply Hague 2005 to all agreements concluded between the original entry in force of the Convention in 2015 and the entry in force of the Convention when the UK joins as an independent Contracting State; it is not clear if the same approach will be followed by other EU and EEA members.
- In addition, in relation to Service of Documents and Taking of Evidence, the Hague Conventions will continue to apply
- In the event of a no-deal Brexit, EU rules governing the enforceability of UK judgments in EU will cease to have effect after the withdrawal date. This will apply to all UK judgments that have not been enforced before that date. However, the UK has indicated that it will continue to enforce judgments given in other EU/EEA states where the proceedings were initiated before that date: this includes court settlements and registered authentic instruments .
- The Brussels I Regulation will no longer apply between the UK and EU27. England and Wales will fall back on pre-existing common law rules for the recognition and enforcement of foreign judgments. Judgments from EU member states will be treated in the same way as those coming from third countries where there is no agreement in place between the UK and the country in question on the recognition and enforcement of judgments.
- The government 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 agreements. As an example, many banking contracts contain asymmetric clauses and as such are not covered under the 2005 Convention.
- Similarly, the national law of each EU/EEA state will determine whether a foreign UK judgment can be recognised and enforced in that jurisdiction. Some EU member states do not have rules allowing for the recognition of judgments from non-EU/EEA states.
- The Insolvency Regulation will no longer be applicable between the UK and EU27 member states. An insolvency officeholder appointed in the UK will have difficulty obtaining recognition in the EU. The only member states that have implemented the UNCITRAL Model Law on Insolvency (other than the UK itself) are Greece, Poland, Romania and Slovenia. Except in those countries, the UK officeholder would have to seek recognition under local law on a case-by-case basis
- Other EU regulations concerning the creation of special instruments in specific fields (e.g. the Motor Insurance Directive) will no longer apply. EU rules protecting the weaker party, for example victims of motor accidents, will no longer apply in the UK.
- The Service Regulation and the Evidence Regulation will no longer apply. In most cases it will be possible to rely on the Hague Service Convention and the Hague Evidence Convention however.