Brexit, deal or no deal: a litigator's perspective

The post below was first published on our Litigation blog

Over the past couple of weeks, the government has published the final text of the draft Withdrawal Agreement setting out the arrangements for the UK’s withdrawal from the EU on 29 March 2019 and the draft Political Declaration on the future relationship between the EU and the UK. This is therefore a good opportunity to consider the impact of Brexit from a litigator's perspective, whether or not a withdrawal deal is reached. (Although the deal has now been approved by EU leaders, it still faces highly uncertain votes in the UK Parliament.) So, what are the implications for English civil litigation?

With a deal

The draft Political Declaration does not contain anything of particular relevance so far as English civil litigation is concerned, focusing instead on matters such as trade and economic cooperation, law enforcement and criminal justice, foreign policy, and security and defence. This may not be seen as surprising, as the issue of civil judicial cooperation is usually dealt with outside of free trade agreements and we understand that the EU and UK did not discuss its inclusion, but it is nonetheless disappointing not to at least reference a shared objective to maintain cooperation in this area.

The draft Withdrawal Agreement is more significant, from a litigation perspective. It preserves various provisions relating to civil cooperation for the duration of a transition period to be established by the agreement, through to 31 December 2020. In particular:

• By article 66, current rules on applicable law in contractual and non-contractual matters under the Rome I and Rome II Regulations (Regulations 593/2008 and 864/2007) will apply to contracts concluded, or events giving rise to damage, before the end of the transition period.
• By article 67, current rules on both jurisdiction and enforcement of judgments under the recast Brussels Regulation (Regulation 1215/2012) will apply where proceedings are commenced before the end of the transition period.
• By article 68, current provisions relating to service and the taking of evidence (under Regulations 1393/2007 and 1206/20011) will apply where the relevant document for service or request for the taking of evidence was received before the end of the transition period.

After the end of the transition period, how these matters are to be dealt with will depend on what arrangements (if any) are agreed during the transition period. It is to be hoped that, in relation to jurisdiction and enforcement at least, something can be agreed which broadly mirrors the current arrangements under the recast Brussels Regulation or, at a minimum, an agreement can be reached for the UK to participate in the Lugano Convention. The UK government has previously indicated that this is its intention (see here).

Without a deal

If, however, the UK leaves the EU on 29 March without a deal, there clearly will not be time to put in place any such arrangements before the UK's exit. In those circumstances, the position will be as summarised below.

Applicable law

When it comes to the law which applies to determine a dispute, very little will change, whether a dispute is before the English court or an EU member state court.

• The UK will incorporate the Rome I and Rome II rules on applicable law into English law from the date of exit, as these do not require reciprocity to operate. Accordingly, in cases before the English court, the same rules will be applied as currently to determine the law which applies to a dispute. Accordingly, a choice of the law of an EU member state (or any other law) to govern contractual or non-contractual obligations will generally be given effect.
• The Rome I and Rome II Regulations will still apply to determine the applicable law in disputes before EU member state courts. Under Rome I and Rome II, it does not matter whether the law chosen by the parties, or the law indicated by the rules in the absence of choice, is the law of an EU member state or not. Therefore, even though the UK will no longer be part of the EU, an EU member state court will generally continue to give effect to a choice of English law to the same extent as currently.

Jurisdiction and enforcement

The position in relation to jurisdiction is more complex. In case we leave the EU without an agreement, the UK intends to join the 2005 Hague Convention on Choice of Court Agreements, which it can do without agreement from the EU. The UK is currently a party by virtue of its EU membership, but would have to join in its own right to continue to take the benefit of Hague post-Brexit. At the moment Hague only applies between the UK and Mexico, Singapore and Montenegro, but post-Brexit (assuming no other agreement is reached on jurisdiction and enforcement of judgments) it would also apply between the UK and EU.

Hague is more limited than the current arrangements, in particular because it applies only where there is an exclusive jurisdiction agreement in favour of a contracting state's courts. The government's intention is to join Hague with effect from 1 April 2019 – for technical reasons, it will not be able to join sooner, and so that will mean there will be a two day gap when the UK is not a member. This leads to some uncertainty, since the Convention applies only where an exclusive jurisdiction clause was agreed after the Convention came into force for the chosen state and proceedings were instituted after the Convention came into force for the state of the proceedings.

It is clear that UK courts will ignore the break in the UK's membership and continue to give effect to jurisdiction clauses and enforce judgments that would otherwise fall within Hague (ie clauses agreed pre-Brexit for non-EU Hague contracting states, and clauses agreed after 11pm on 29 March but before 1 April for all Hague contracting states), by virtue of the Civil Jurisdiction and Judgments (Hague Convention on Choice of Court Agreements 2005) (EU Exit) Regulations 2018. However, the UK cannot control how other contracting states (including EU member states) will treat exclusive jurisdiction clauses in favour of the UK which were agreed before Hague re-enters into force. There is therefore some uncertainty over whether other contracting states will apply Hague rules where an exclusive English jurisdiction clause was agreed before 1 April 2019. For more detail see this post.

The government has said that it will publish another statutory instrument dealing with transitional provisions relating to the recast Brussels Regulation. That is expected to address how the UK courts will, post-Brexit, treat jurisdiction clauses in favour of EU member states which were agreed pre-Brexit. Again, the UK cannot control how other EU member states will treat jurisdiction clauses in favour of the UK which were agreed pre-Brexit.

If neither the recast Brussels Regulation nor the Hague Convention applies to a particular agreement then each country will apply its own domestic rules to questions of jurisdiction and enforcement.

• When it comes to the English courts, that means in most cases the common law rules, and the upshot is that the court will generally respect an exclusive jurisdiction clause in favour of another country and will generally enforce judgments given by other countries, subject to limited exceptions.
• So far as enforcement of English judgments is concerned, most (but not necessarily all) EU countries will enforce foreign judgments even without a specific reciprocal regime, although the type of judgment enforced may be more limited and the procedures involved more time consuming and costly. There may also be some question marks about whether EU member state courts would give effect to an exclusive English jurisdiction clause in these circumstances, particularly where proceedings were started in the EU member state before they were started in England.

Service of documents and taking of evidence

The EU Service Regulation and the EU Taking of Evidence Regulation will no longer apply to the UK when it leaves the EU, as they cannot operate effectively without reciprocity between the UK and the EU27.

The government's draft statutory instrument, the Service of Documents and Taking of Evidence in Civil and Commercial Matters (Revocation and Saving Provisions) (EU Exit) Regulations 2018, contains transitional provisions which mean that the two Regulations will continue to apply to outstanding requests for documents to be served or evidence to be taken in the UK, where those requests were received in the UK before exit day. Otherwise, the position will depend on domestic provisions in the relevant countries and on membership of relevant conventions such as the Hague service and evidence conventions. For more detail see this post.

The minutes of the October meeting of the Civil Procedure Rule Committee (CPRC) suggest that a further implication of Brexit in relation to service of documents is that the court's permission may be required to serve proceedings out of the jurisdiction in a much greater range of cases. Currently, under CPR 6.33 and 6.36, the court's permission is not generally required where the court has jurisdiction under the recast Brussels Regulation, the Lugano Convention or the Hague Choice of Choice Convention, but is required in other circumstances. The CPRC envisages that an extra cadre of judges may have to be drafted in to deal with permission applications alone.