The UK Government’s Brexit White Paper – a focus on judicial cooperation

Posted in UK and EU legal framework Dispute resolution and litigation Enforcement

The UK Government’s Brexit White Paper provides some detail as to the UK’s aspirations for judicial cooperation post-Brexit.

As set out in earlier blog posts, both the UK and the EU have previously published papers recognising the importance of judicial cooperation. Indeed, as the Government’s White Paper states, “civil judicial cooperation is mutually beneficial to both the UK and the EU. Businesses benefit from legal certainty in the event of disputes and are more confident trading across borders … The future relationship between the UK and the EU should protect these advantages”.

Currently, the recast Brussels Regulation provides an EU-wide regime for determining jurisdiction and enforcement of judgments in civil and commercial matters. It is directly applicable in the UK and will therefore cease to apply following the UK’s departure from the EU absent any new agreement. It is also inherently reciprocal. Although the UK could in theory transpose the contents of the Brussels Regulation into domestic law via the EU (Withdrawal) Bill, this would have limited practical benefit if courts of EU Member States were no longer bound to respect and uphold English jurisdiction or apply the provisions of the Brussels Regulation to the enforcement of English judgments.

The White Paper points out that post-Brexit, the UK’s status as a third country should not pose an impediment to securing agreement as to future judicial cooperation. The Paper cites by way of example, the Lugano Convention, which provides for cooperation between EU and European Free Trade Association (EFTA) countries.

The White Paper (as per the Government’s 2017 position paper), proposes that the UK will seek to participate in the Lugano Convention after its exit from the EU.

However, the White Paper also recognises that some of its provisions of the Lugano Convention have been overtaken. An example would be the risk of ‘torpedoes’, whereby an exclusive jurisdiction agreement could be frustrated by proceedings being started in the courts of a different member state, with the result that the member state chosen by the parties would have to wait until the first court decided that it did not have jurisdiction, a process that could take years. This loophole has been closed in the recast Brussels Regulation, but remains a weakness of the Lugano Convention.

Accordingly, the White Paper proposes that the UK is keen “to explore a new bilateral agreement with the EU, which would cover a coherent package of rules on jurisdiction, choice of jurisdiction, applicable law, and recognition and enforcement of judgments in civil, commercial, insolvency and family matters. This would seek to build on the principles established in the Lugano Convention and subsequent developments at EU level in civil judicial cooperation between the UK and Member States. This would also reflect the long history of cooperation in this field based on mutual trust in each other’s legal systems.”

It is unclear whether the EU would be amenable to the suggestion of a new bilateral arrangement, particularly insofar as the UK retains its position that it would not want to be subject to the jurisdiction of the CJEU post-Brexit.

An alternative option for the UK would be to accede to the Hague Choice of Court Convention, which the UK could do unilaterally once it has left the EU. EU Member States (along with Singapore and Mexico) are already party to the Hague Convention, although it is worth noting that the Hague Convention is more limited insofar as it applies to only certain types of exclusive jurisdiction clauses and is unlikely to apply to asymmetric jurisdiction clauses and hybrid arbitration clauses. Curiously, although the Hague Convention was discussed as a possible option in the UK’s earlier position paper, it is not mentioned in the White Paper.

As we have set out previously, both in relation to jurisdiction and enforcement of judgments, even if the UK and EU are unable to reach an agreement regarding future judicial co-operation, this should not undermine the advantages of litigating civil and commercial claims in the English courts. Nevertheless, if agreement can be reached this will help to provide certainty and continuity for businesses involved in cross-border litigation.

Brexit: planning for the future as negotiations continue

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