The UK Government published yesterday its future partnership paper on cross-border civil judicial cooperation with the EU after Brexit. This legal framework will determine important matters such as which country’s courts will be competent to hear any civil, commercial or family disputes with a cross-border element, which country’s laws will govern the parties’ contractual and non-contractual obligations, recognition and enforcement of foreign court judgments, service of foreign court proceedings, and managing cross-border insolvencies, amongst others.
The current civil judicial cooperation framework is provided by a number of EU instruments, including the Brussels Recast Regulation, Rome I Regulation, Rome II Regulation, and Service Regulation. As we have discussed in previous posts (here, here, here and here), when the UK withdraws from the EU, it will no longer be a part of that EU regime. The UK and EU will need to agree a new framework; ideally one that provides an equivalent ease of use and level of certainty for individuals and businesses engaged in cross-border transactions.
In its paper, the UK stated that it will seek to agree new close and comprehensive arrangements for civil judicial cooperation with the EU, on a reciprocal basis, and which “mirror closely the current EU system”. The UK said that the new framework should include clear rules governing: which country’s courts hold responsibility for resolving disputes; the enforcement of the resulting judgment in other countries; and the approach to managing insolvency in cross-border situations. There also should be common rules that respect contractual court jurisdiction agreements and minimise the potential for delaying tactics. This no doubt refers to the so-called “Italian torpedo” where parties abused the lis pendens rule in the original Brussels Regulation (i.e. the EU court first seised of a dispute should determine whether or not it has jurisdiction) and commenced proceedings before notoriously slow courts in breach of contractual jurisdiction clauses. The Brussels Recast Regulation sought to rectify this problem by making the lis pendens rule subject to any exclusive jurisdiction agreement.
The UK stated that it intends to incorporate into domestic law the EU’s Rome I and Rome II Regulations which deal with choice of contractual and non-contractual governing law. As explained in our prior post (here), incorporating EU laws into UK domestic law would mean that the corpus of EU law will be ‘frozen’ on Brexit and then evolve in accordance with UK legislation and case law, so they may gradually diverge from EU law. The UK has restated that leaving the EU will bring an end to the direct jurisdiction of the Court of Justice of the European Union (CJEU) in the UK, however, “where appropriate” an agreement on future civil jurisdiction cooperation should “[take] into account regional legal arrangements, including the fact that the CJEU will remain the ultimate arbiter of EU law within the EU”. We expect this statement will be expanded upon in the UK’s paper on its future relationship with the CJEU, due to be published today.
In addition, the UK intends to seek to continue to participate in the Lugano Convention (closely related to the Brussels Regulation but without the improvements made in the Recast regulation) and the Hague Conventions to which the UK is already a party or which it currently participates in by virtue of its EU membership. These address, amongst other things, choice of jurisdiction, choice of court agreements and recognition and enforcement of civil judgments.
Consumer and family disputes also received a mentioned. The UK wants consumers to have the right to bring claims in their own country’s courts regardless of where the supplier is based and for resulting judgments to be enforceable, and for families to be able to resolve disputes in a clear, predictable way, without delay.
In an annex to its position paper, the UK set out its response to the EU’s position on civil judicial co-operation in the context of a separation. The UK and the EU seem largely in agreement over the general principles that should govern the winding down of their existing relationship in the event that no agreement on a future relationship can be reached.
The UK set out the following general approach:
- existing EU rules governing the applicable law for contractual and non-contractual obligations should continue to apply to contracts concluded before the withdrawal date, and in respect of non-contractual liability, to events giving rise to damage with occur before the withdrawal date.
- existing EU rules governing court jurisdiction should continue to apply to all legal proceedings instituted before withdrawal date.
- where a choice of court has been made prior to withdrawal date the existing EU rules should continue to apply to establishment of jurisdiction, and recognition and enforcement of any resulting judicial decision, where a dispute arises to which such a choice applies, whether before or after withdrawal date.
- existing EU rules governing recognition and enforcement of judicial decisions should continue to apply to judicial decisions given before the withdrawal date, and to judicial decisions given after the withdrawal date in proceedings which were instituted before that date.
- judicial cooperation procedures and requests for information within the European Judicial Network in civil and commercial matters which are pending on the date of withdrawal should continue to be governed by the existing EU rules. The UK agrees that there is a need to identify the appropriate procedural stage that has to have been reached for the procedure to continue in accordance with those rules.