18 09 2017 Insights Brexit

Two roads diverge: outcomes for civil judicial cooperation post-Brexit - a UK view

Brexit Final

By Diarmaid Gavin and Mark Murran
18 September, 2017

The Future Partnership Papers published by the UK in advance of the last round of negotiations in Brussels are high in sentiment but short on detail. What is clear from the paper on cross-border civil judicial cooperation is that Theresa May’s ‘red line’ on the role of Court of Justice of the European Union (CJEU) in a post-Brexit United Kingdom is perhaps closer to a shade of pink.

The paper serves to highlight perhaps a more realistic assessment that any future relationship between the parties must necessarily involve some sort of recognition of the CJEU while at the same time reiterating the UK’s view that the direct jurisdiction of the CJEU must come to an end.

The UK restates its commitment to maintaining cooperation for the benefit of individuals, families, consumers and businesses and its longing for a “deep and special relationship” with the EU, but it is hard to see this happening in any meaningful way before deadline day without the UK softening its approach or agreeing to some sort of transitional arrangement.

However the publication of the papers has been overshadowed by the elephant in the room that is the divorce settlement, encompassing citizens’ rights, the exit bill and Northern Ireland. They come at a time when the EU’s chief negotiator Michel Barnier is keen to refocus the talks on these issues and the EU position that there can be no negotiation of any future relationship until this stalemate is rectified.

A Future Framework?

The paper recognises that existing international conventions will cover some but not all areas hence the need for a more comprehensive agreement which should reflect the principles of cooperation under the current EU framework.

The UK states its intention to incorporate the Rome I & II Regulations into the domestic legal order in line with the ‘Great Repeal Bill’. This would provide certainty in relation to choice of law for contractual and non-contractual obligations. However this can only be the case where the UK is required to follow or give due account to past as well as future CJEU rulings if there is to be any uniformity in its application.

Rome I & II do not however cover jurisdiction, or recognition and enforcement of judgments. Without a robust solution being proposed this will undoubtedly lead to a situation whereby parties to a contract will move away from English jurisdiction clauses in search of certainty.

This has the potential to impact England and Wales as one of the world’s largest dispute resolution hubs while at the same time representing a huge opportunity to competing jurisdictions. Ireland would be well placed to capitalise on this shifting market as the last remaining native English speaking member of the EU.

The UK says it wants to “continue and deepen civil judicial cooperation internationally”, signalling a move towards a more global regime. To this end they clearly state their intention to continue participation in the Lugano Convention of 2007 which covers jurisdiction and the recognition and enforcement of judgements.

The Lugano Convention was however modelled on the earlier Brussels I Regulation so will not take into account many of the updates from the Brussels Recast Regulation. A further fly in the ointment is that the convention is only open to EU Member States, future members of the European Free Trade Area (EFTA), which is another matter entirely, or other third party states upon unanimous agreement of all contracting parties which is by no means guaranteed.

The UK also wants to continue being a “leading member” in the Hague Conference and participate in conventions to which they are already a party and those to which they are already a party by virtue of the membership of the EU i.e. the 2005 Convention on Choice of Courts Agreements.

In this regard service of documents abroad would fall to be dealt with under the 1965 Convention to which the UK is already a party other than in their capacity as an EU Member State. The 2005 Convention on the other hand would have to be ratified afresh. While this would go some way to helping, the 2005 Convention is not the truly global solution the UK seeks, in that at present Mexico and Singapore are the only non-EU countries party to it.

The UK is adamant that leaving the EU will not weaken the rights of individuals and businesses but it is hard to see the transition being seamless when they are proposing to adopt measures which are not tailored to deal with the situation they find themselves in.

The Road Less Travelled

The paper also sets out guidelines should agreement between the parties not be reached. EU rules governing applicable law for contractual and non-contractual obligations should continue to apply for contracts concluded prior to the withdrawal date.

EU rules governing jurisdiction should continue to apply for all legal proceedings instituted before the withdrawal date. Where choice of court has been made prior to the withdrawal date the existing EU rules should continue to apply.

The existing EU rules around recognition and enforcement of judicial decisions should continue to apply to decisions given before the withdrawal date or to proceedings instituted before the withdrawal date.

While this provides some helpful clarity to governing law and jurisdiction in commercial contracts enter into before formal withdrawal of the UK the enforcement of such contracts after withdrawal remains uncertain.

The Road Not Taken...

The tone of the paper gives the impression that the UK is sorry it cannot travel both roads, wanting all the perks that come with membership of the EU without the supervision. The question remains that come March 2019 will the UK look back and be happy with its choice.

We may gain more insight into the UK’s priorities sooner than we think as Downing Street has announced that Theresa May will give a speech on 22 September in Florence which will delay the next round of negotiations, which were due to resume this week.

At the very least the speech will act as a yardstick to assess whether the UK has softened its approach to Brexit since Theresa May’s Lancaster House address in January of this year.

If you have any queries in relation to the content of this Insight, please contact:
Diarmaid Gavin, Partner, diarmaid.gavin@rdj.ie, + 353 21 4802707

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