The draft Civil Jurisdiction and Judgments (Amendment) (EU Exit) Regulations 2019

Posted in UK and EU legal framework Dispute resolution and litigation Enforcement Contractual and counter-party

The UK Government has published a draft statutory instrument under the European Union (Withdrawal) Act 2018, which will revoke, so far as the UK is concerned, the Brussels Regulation, Lugano Convention and other EU-derived legislation concerning the allocation of jurisdiction and the recognition and enforcement of judgments in civil and commercial matters.

Pursuant to the terms of the EU (Withdrawal) Act, all EU-derived law will become part of domestic law, under the category of ‘retained EU law’. This is so as to provide continuity following Brexit as far as possible.  However, in accordance with section 8 of the Act, Ministers may by regulations make such provision “as the Minister considers appropriate to prevent, remedy or mitigate (a) any failure of retained EU law to operate effectively, or (b) any other deficiency in retained EU law arising from the withdrawal of the United Kingdom from the EU.”

Under the Act, ‘deficiencies’ are defined as including instances where the Minister considers that the retained EU law contains anything which has no practical application in relation to the UK; relates to EU entities which no longer have functions in that respect under EU law in relation to the UK; or contains EU references which are no longer appropriate. However, it also applies where a particular piece of retained EU law is based on reciprocity. The Brussels Regulation and Lugano Convention are based on reciprocity and as such, there would be little benefit to the UK if it were to retain them unilaterally.

The draft statutory instrument makes clear that (save for retained provisions relating to consumer and employment matters), all rights deriving from the regimes “cease to be recognised and available in domestic law … on exit day”.

As to what will replace them within domestic law, the accompanying explanatory notes state that “jurisdiction and the recognition and enforcement of judgments will be determined by a combination of the existing common law and statute which currently applies to cases to which the Brussels regime does not apply, and (where it applies) the Hague 2005 Convention on Choice of Court agreements to which the UK is acceding as an independent Contracting Sate post exit”. As we have noted previously, the Hague Choice of Court Convention is an international agreement pursuant to which the courts of Contracting States agree to uphold exclusive jurisdiction agreements, provided that the nominated court is in one of the Contracting States and the agreement complies with certain prescribed standards, and to recognise and enforce judgments to the extent that the parties have entered into a qualifying exclusive jurisdiction agreement. The UK can accede to the Hague Choice of Court Convention unilaterally, and its advantage is that it covers all EU countries (as well as Singapore, Mexico and Montenegro). However, it is more limited than the Brussels Regulation and the Lugano Convention in that it would only apply to certain types of exclusive jurisdiction clauses.

As such, for cases falling outside of the Hague Choice of Court Convention, the UK will revert to existing common law and statute on questions of jurisdiction. From an English law perspective, questions of jurisdiction are generally viewed through the prism of service of proceedings and in accordance with provisions of the Civil Procedure Rules. This can give rise to questions as to whether the court’s permission will be required and/or granted to serve a defendant located outside of the jurisdiction, which  in turn gives scope for the possibility of forum non conveniens arguments if it can be shown that the courts of another country would be manifestly more appropriate to hear the claim. As a result, unlike under the Brussels regime, there may be the possibility of parallel proceedings in the UK and EU Member State courts.  On the other hand, the English courts would once again have power to grant anti-suit injunctions to prevent a party pursuing proceedings in another Member State, something which they cannot do at present.

Similarly, as regards recognition and enforcement, fresh proceedings must be commenced to enforce a foreign judgment. Judgments from US courts are regularly enforced in England in this way without undue difficulty, despite the fact that the UK and the US have no reciprocal enforcement agreement. Procedurally, this is less straightforward than the streamlined mechanism for enforcement under the Brussels regime. However, the substantive considerations are not dissimilar, albeit the jurisdiction of the foreign court would need to be established. Moreover, for circumstances where the Hague Choice of Court Convention applies, the Convention provides its own regime for enforcement of judgments across Contracting States.

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