Brexit: What You Need To Know - Litigation

July 2016

As the intertwined laws of the UK and the EU are unravelled in the exit negotiations, changes to litigation seem inevitable.

  • Contracts: At the moment the changes are unknown and in particular we do not know if any changes will be retrospective. As such, companies should be thinking about how they can protect themselves and keep up to date with any interim and final changes made.

  • It would also be advisable for companies to carry out a review of the contracts currently in place, particularly considering:

    • jurisdiction clauses
    • whether a force majeure clause might be triggered
    • whether there is any potential for the contract to be frustrated or terminated
    • whether there is any clause that deals with the changes in law

    All of these issues may give rise to disputes, which had not previously been considered. Short-term contracts are less likely to be affected, due to the two year period of negotiations once Article 50 has been triggered.

    In any new contracts, parties should consider the contracts carefully, for example whether or not they wish to include in their force majeure clauses express exclusions of the UK leaving the EU or whether the contract can/cannot be terminated upon the UK leaving the EU.

  • Choice of Law: Currently the Rome I (593/2008/EC) (contractual claims) and Rome II (864/2007/EC) (tortious claims) EU Regulations provide that the courts will uphold the parties’ choice of law clause. If rules similar to Rome I are not agreed, we may revert to the rules in place before Rome I, namely the Rome Convention, enacted in the UK by the Contracts (Applicable Law) Act 1990, which has terms similar to Rome I, so it is unlikely that Brexit will have much of an impact here. Unless rules similar to Rome II are put in place, it is possible that the English courts will apply the rules in place pre-Rome II, for example under the Private International Law (Miscellaneous Provisions) Act 1995. Unlike Rome II, this Act does not give the parties an express right to choose the law applicable to non-contractual relations and instead provides that the applicable law will be based upon the law of the country in which the tort occurred, or the country in which the most significant event occurred.

  • Jurisdiction: The Recast Brussels Regulation (1215/2012/EU) currently sets out which courts of the EU member states should have jurisdiction in civil and commercial disputes. Following Brexit, the UK and the EU may agree something similar. In addition, or alternatively the UK may join the Lugano Convention (currently between member states and members of the European Free Trade Association, such as Switzerland, Iceland and Norway) and/or the Hague Convention on Choice of Court Agreements 2005. If no convention applies, the English courts may revert to forum conveniens principles, under which they consider the extent of any relationship with this jurisdiction, and whether the proceedings were first to be issued.

  • Service: Currently if proceedings are brought in England and Wales against someone in the EU, permission is not generally required under the Service Regulation (1393/2007/EC). After Brexit serving court documents outside of England and Wales may become more complicated, where no agreements for reciprocal service are in place. Parties may wish to consider appointing an agent for service, to attempt to make service of court documents more straight forward.

  • Enforcement: The recognition and enforcement of judgments in other member states may become more complicated and vice versa for EU judgments to be recognised in England. The Recast Brussels Regulation currently makes this process fairly straight forward.

  • EU Law and the European Court of Justice (ECJ): It is unknown at this point what will happen in relation to the EU law, particularly that which has direct effect (without the need for domestic implementation). One example is the EC Council Regulation 261/2004, relating to airline delay, cancellation and assistance claims – it is unknown whether airlines who fly in and out of the UK will voluntarily continue to adhere with the Regulation or will the UK adopt a domestic law to implement it.

  • It is also unknown how ECJ precedents will be interpreted. Currently, the ECJ has sovereignty over the UK courts on points of European Law. Individuals seeking to appeal decisions made in the UK on points of EU law, will no longer appeal to the ECJ. It is unknown how the UK courts will deal with ECJ precedents and the English case law interpreting these points, the UK courts might feel able to depart from ECJ authorities and re-interpret the law.

  • Alternative Dispute Resolution (ADR): Recent changes designed to encourage the use of alternative dispute resolution (ADR) and online dispute resolution (ODR) may well be affected, for example businesses in the UK, since the beginning of this year, are required to include a link to the ODR platform on their website, run by the European Commission. ‎(Read our previous QuickStudy on ADR/ODR Regulations and Regulation 261 Claims).