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Brexit: what happens to international litigation?

At the present time, a large range of civil proceedings, especially in the commercial area, are governed by an EU measure, the Brussels I Regulation (Recast) of 2012. This applies whenever the defendant is domiciled in another EU country, whenever there is a choice-of-court agreement designating a court in the EU, and whenever an EU Member State has exclusive jurisdiction over a particular matter, for example title to land or registered intellectual-property rights. The Regulation also applies to the recognition and enforcement of judgments between different EU States.

This has many benefits for the United Kingdom. It means that persons and companies domiciled in the United Kingdom are protected from the often exorbitant and unfair jurisdictional rules applied by some Member States; it precludes other Member States from hearing cases over which the United Kingdom has a legitimate claim to exclusive jurisdiction; and it requires other Member States to respect exclusive UK choice-of-court agreements. It also provides a simple and effective means of enforcing UK judgments in other EU States.

When the United Kingdom leaves the European Union, all this will come to an end unless an agreement is reached to keep the Regulation in operation. Should the United Kingdom try to obtain such an agreement? Would the EU be willing? These are the questions which have been exercising the minds of big law firms and barristers practising in the commercial area ever since the referendum result was announced. The Ministry of Justice has conducted a survey of opinion and the Lord Chief Justice has set up a committee. The almost unanimous view of those concerned is that the United Kingdom should try to obtain such an agreement. Formal discussions with the European Union are yet to begin, but initial indications are not discouraging.

The almost unanimous view of those concerned is that the United Kingdom should try to obtain such an agreement. Formal discussions with the European Union are yet to begin, but initial indications are not discouraging.

If such an agreement were concluded, what would it look like? Basically, it would provide that the United Kingdom would continue to be treated as if it were a Member State for the purposes of the Brussels Regulation. EU Member States would not be entitled to hear claims against individuals and companies domiciled in the United Kingdom unless they had jurisdiction under the provisions of the Regulation. If the parties had concluded a choice-of-court agreement giving exclusive jurisdiction to the courts of the United Kingdom, the courts of EU States would not be entitled to hear the case. The same would apply if UK courts had exclusive jurisdiction under the rules of the Regulation. UK judgments would be recognized and enforced in EU States. In return, the United Kingdom would recognize similar rights for persons domiciled in EU Member States and respect exclusive choice-of-court agreements designating courts in the European Union. Judgments given by courts in the EU would be recognized and enforced in the United Kingdom.

The plan is to maintain the Regulation in force almost exactly as it stands at present. Some adjustments may be necessary, but they would be minor. What about the Court of Justice of the European Union (CJEU)? The British Government would not be happy about giving it a continuing role. Under the Lugano Convention, which applies a similar system between the EU and three non-EU States (Norway, Iceland and Switzerland), the CJEU has no direct role but national courts are obliged to give due consideration to any precedents laid down by it. In practice, they are almost always followed. Perhaps this approach could apply under the new agreement. If not, there would probably have to be a special tribunal set up to ensure that the agreement was properly applied on both sides. The members of the tribunal would have to be acceptable to both the United Kingdom and the European Union.

If might be thought that all this is unnecessary. Could not similar results be obtained by other means? The Lugano Convention might provide the answer. At present, it applies to the United Kingdom because the UK is an EU Member State. Could the United Kingdom not join in its own right after Brexit? The problem with this is that the Lugano Convention is based on an earlier version of the Brussels Regulation and is unsatisfactory in various ways. For example, the dreaded ‘Italian torpedo’ may still work under it. In any event, unless the UK joined EFTA, it could not become a Party to Lugano without the unanimous consent of the other Parties. So the European Union would have a veto: if it did not want to conclude a special agreement with the United Kingdom, it would probably not allow the UK to join Lugano. Joining Lugano would be a good idea, but it is not a substitute for Brussels. The United Kingdom will just have to sit down with the EU and hammer out an agreement.

Featured Image Credit: ‘The pro-EU march from Hyde Park to Westminster in London on March 25, 2017, to mark 60 years since the EU’s founding agreement, the Treaty of Rome’ by Ilovetheeu. CC BY-SA 4.0 via Wikimedia Commons

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