The Brexit transition period is rapidly coming to a close, but there are still questions surrounding the future relationship between UK and European law, particularly in the area of international dispute resolution. Looking ahead to 31 December, what could any changes mean for UK businesses and how can they prepare?
What will happen to cross-border judgments after Brexit?
Without an applicable agreed treaty between the UK and the EU, the recognition and enforcement of cross-border judgments will differ considerably due to disparities in the local laws of EU member states. As such, UK businesses would have to seek legal advice in the foreign jurisdiction where the UK judgement is to be enforced.
This could lead to a host of complexities, causing delays, increased costs and general uncertainty regarding the enforcement of a judgment.
Is there a solution?
The 2007 Lugano Convention could be a solution to this issue, maintaining the status quo on the enforcement and recognition of judgments for businesses trading with the EU. Simply put, the convention offers automatic mutual recognition of court judgments, as long as they comply with set procedural formalities.
Having applied to accede to the convention as an independent member, the UK now needs the agreement of all signatories. Although Denmark, Iceland, Norway and Switzerland have given their support, the EU – at present – has not. Only time will tell as to whether this solution will be accessible.
Rejoining the 2005 Hague Convention
An Instrument of Accession has also been deposited by the UK to rejoin the 2005 Hague Convention on Choice of Court Agreements. The Convention requires signatory states to recognise each other’s judgments where disputes have to be litigated in the courts of another signatory state - these are currently the EU, Mexico, Singapore and Montenegro.
However, the Hague Convention does have limits, with contracts where one party is a ‘consumer’, or which contain asymmetrical jurisdiction clauses not falling within the scope of the Convention.
London as a centre for commercial disputes
English law’s reputation for being transparent, fair and impartial has placed London as a global centre for resolving commercial disputes. However, this status isn’t set in stone, with other jurisdictions looking to take over London’s position. Something that will be made easier should the UK/EU deal fail to prioritise the strong judicial cooperation that the country has previously enjoyed.
Now is the time to act
For businesses that have already secured a judgment against an organisation in the EU, now is the time to make the most of the transitional period, with UK judgments still automatically recognised in the EU.
Those which haven’t yet issued court proceedings, or are in the middle of the process, should consider seeking professional advice from a lawyer in the state of intended enforcement. Foreign rules on enforcement may impact the management of UK court proceedings.
As the end of the Brexit transition period approaches, UK businesses should keep an eye on the status of the 2007 Lugano Convention accession and investigate whether their contracts are eligible under the Hague Convention. For organisations that can, it would be prudent to take advantage of the existing EU regime in order to avoid any potential future difficulties.
We can help
If you have obtained a judgment against a person or entity that will have to be enforced in the EU, we can help you to enforce that judgment now or advise you on the implications of delaying enforcement beyond 31 December 2020.
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