Yesterday the government published the proposed draft EU withdrawal agreement. Leaving aside the more controversial aspects such as the Northern Ireland “backstop”, the document contains detailed provisions regarding continued judicial cooperation between the UK and EU member states in civil and commercial matters. This article summarises the main points.
Overview
In summary, if parliament approves the proposed draft, very little will change for cross border enforcement during the transition period. The transition period is planned to last for a period of 21 months after March 2019, ending in December 2020. After that time, the provisions of the withdrawal agreement relating to judicial cooperation in civil and commercial matters would expire. By that time, it is hoped that a replacement agreement will have been negotiated so that (at the very least) legal practitioners and their clients will have a degree of certainty on the legal framework around pursuing or defending claims against EU individuals and entities.
Key provisions
Articles 66 onwards of the draft agreement relate to cross border enforcement in civil and commercial matters.
Governing law
According to Article 66, the current regime to determine the governing law of a contract or the law governing other disputes, such as negligence (contained in regulations known as Rome I and Rome II) would expressly continue to apply to any contracts concluded before the end of the transition period, and any claims for damages resulting from events that have occurred before the end of the transition period.
Jurisdiction
According to Article 67(1), the current regime to determine which EU country’s courts have jurisdiction over particular disputes (contained in the regulation known as “Brussels Recast”) would continue to apply in respect of legal proceedings instituted before the end of the transition period. Among other things, these provisions are intended to prevent the confusion caused by parallel Court proceedings running in two separate EU countries in relation to the same dispute.
Enforcement
According to Article 67(2):
According to Article 68, the current EU regime for the service of Court documents would continue to apply where requests and applications for service have been received by the central authority (or other relevant serving entity) before the end of the transition period. Similarly, the current EU regime regarding co-operation in the taking of evidence would continue to apply, where requests for assistance from the Courts of an EU member state, in taking evidence from witnesses, have been received by the requested Court before the end of the transition period.
Conclusions
In the event parliament votes against the proposed agreement, there is a real question over whether UK claimants who are currently part way through enforcement processes against an EU party, using these EU mechanisms, would be able to continue to rely on them. This would depend on the attitude of the Courts of other EU member states.
As a result, the proposed transitional arrangement, if approved by parliament, would provide a degree of certainty for the next 2 years around enforcement processes. This can surely only assist businesses and individuals in avoiding potentially significant wasted legal costs. Without the proposed transitional arrangement, EU enforcement mechanisms which have been instigated now, could no longer have any effect. Claimants may need to begin Court action afresh, either in the UK or abroad. Leaving aside other more controversial aspects of the proposed draft document, having a degree of certainty on these issues must be a positive step.
Nevertheless, after 2020 (and depending on any future deal that is struck), the EU mechanisms described above may no longer apply. In preparation, the government is putting in place the necessary steps to ratify the Hague Convention on Choice of Court Agreements. This would provide a more streamlined process for cross border enforcement of Judgments which relate to contracts between UK and EU parties, where they have expressly chosen the country where their disputes should be determined. This Convention, however, is only a partial answer, as it does not apply to non-contractual claims, such as negligence claims. A further Hague Convention which would apply to Judgments on other types of claims (known as the “Judgments Project”) is being negotiated but is in its relatively early stages and is unlikely to assist UK claimants in the short term.
If you would like to discuss any of the issues raised by this article please contact Sara Chisholm-Batten.
Sara is a partner in Michelmores Commercial Disputes Team and is an observer for the International Bar Association at the Hague Special Commission on the Judgments Project
