The judicial impact of the Brexit

INTRODUCTION

On June 23rd the British have voted in favour of a Brexit. We are now in a turnover of European history in which we face the UK/EU divorce.

In the present article we will focus on the judicial aspect of the Brexit, and in particular its consequences on judicial international private law. The three main issues in this area of law are the determination of jurisdiction, the mutual recognition and enforcement of judgements between EU member states and the choice of applicable law.

It is important to note that EU regulations, including the regulations on private international law, will not immediately cease to apply to the UK. As long as the British do not officially invoke Article 50 of the Treaty, and during the period of two years provided by the article, the UK will still be submitted to these rules. Therefore the short term consequences on the field of regulation will be rather limited.

Regarding the long term impact of the Brexit, on the other hand, many questions remain unanswered since this impact will depend on the mutual relationship they are going to negotiate in the coming months.

DETERMINATION OF JURISDICTION AND ENFORCEMENT OF JUDGEMENTS

Brussels I bis Regulation

Both determination of jurisdiction and cross-border enforcement of judgements on civil and commercial matters are regulated by the Brussels I Regulation and its Recast of 2012. For other matters, such as insolvency and family matters, specific Regulations exist and Brussels Recast Regulation does not apply.
This instrument provides that, besides some limited exceptions, “a judgment given in a Member State shall be recognised in the other Member States without any special procedure being required”. Preserving the substance of the Brussels I Regulation, the Recast of 2012 introduces here a change of particular importance, namely the abolition of the exequatur, by providing a simplified mechanism for the enforcement of judgements.

The Brussels I Recast and its simplified procedure of cross-border enforcement will not apply to the UK anymore once they officially leave the EU. The concrete consequences of this will depend on the relationship the UK maintains with the EU after the divorce.

The UK joins the EFTA: Lugano Convention

The UK can negotiate to join the European Free Trade Association, composed by the member states of the EU plus Norway, Iceland and Switzerland. In that case, it can sign the Lugano Convention of 2007, which will treat the questions of determination of jurisdiction and enforcement of judgements in civil and commercial matters. This is the extension of the Brussels I Regulation to the EFTA states.
At first sight the consequences of the Brexit on these two aspects of private international law will be very limited if the UK signs the Lugano Convention. However, this Convention is not affected by the 2012 Recast of the Brussels I Regulation. Therefore, besides some other small differences, the exequatur has not been abolished for those states yet, which is an important nuance we will have to keep in mind.

The UK does not join the EFTA

If the UK does not join the EFTA, the impact on free movement of judgements will be considerably more important. To ensure the enforcement of UK judgements in the EU or EU judgements in the UK, treaties will have to be negotiated between them. However, it is not sure if negotiating about free movement of judgements is currently one of the EU’s priorities, considering the other majorly important issues that are still uncertain at the moment (free movement of persons, free movement of goods…).

Anyway, in absence of such treaties, the UK will either have to implement the same rules in their national law, or fall back on the ancient rules applicable before the entry in force of the EU rules on that matter. Therefore judgements will have to be enforced in each country separately on the basis of its national rules. In Belgian national law, article 570 of the Judicial Code, which refers to Belgian Code on private international law, provides the competence of the Court of First Instance on this matters. In Luxemburg law, the tribunal d’arrondissement is competent.

The application of different national rules and the complexity resulting from this plurality could have a negative impact on the international attractiveness of the UK courts and may prove to be a benefit to the other EU member state courts.

Other Regulations on the enforcement of judgements

Besides the Brussels I Recast Regulation for civil and commercial matters and the specific Regulations, for example insolvency and family matters, a few other EU Regulations need to be mentioned if we talk about the judicial consequences of the Brexit. The Regulations on the European Enforcement Order of 2004 and on the Order of Payment of 2006 are also very important, since there currently does not exist any non-EU equivalent on those matters. Both instruments provide a simplified procedure for cross-border (monetary) claims which are uncontested by the defendant, based on standard forms. In fact, those Regulations considerably facilitate the enforcement of judgements between different member states. If they cease to apply once the UK is not part of the EU anymore, the UK can decide to either implement those rules in their national law, which is rather unlikely, or make their own rules and negotiate bilateral treaties with other countries. This will increase the complexity of the procedure of enforcement of judgements between countries.

Also the “Evidence Regulation” of 2001, which facilitates the cooperation on obtaining evidence between member state courts, will have an impact on the judicial procedure of enforcement of judgements. If this Regulation ceases to apply to the UK, they can fall back on the Hague Convention on the Taking of Evidence Abroad in Civil and Commercial Matters of 1970 in their relationship with the contracting states of this Convention. This instrument facilitates the exchange of evidence by means of letters of request and by diplomatic or consular agents and commissioners. In their relationship with non-contracting states, the UK can of course create similar or different rules in their national law, or negotiate cooperation agreements with those countries.

A last EU-instrument that that needs to be mentioned in this context is the “Service Regulation” of 2007 on the service in the Member States of judicial and extra-judicial documents in civil or commercial matters. Here the consequences of the Brexit are similar as for the Evidence Regulation, since the UK can rely on the Hague Convention on that matter.

DETERMINATION OF APPLICABLE LAW

Concerning the third matter of private international law, being the determination of applicable law, two other Regulations apply. The Rome I and Rome II Regulations treat respectively the applicable law in contractual and non-contractual relationships. Contrary to the Lugano Convention for jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, the EFTA states do not have a treaty for choice of law equivalent to Rome I and Rome II. So irrespectively the question of whether the UK will join the EFTA or not, the UK will be able to provide its own rules, even if they are not based on the current EU rules on that matter. But since non EU member states are not submitted to the interpretation of the European Court of Justice, a divergence in interpretation may occur over time.

Notre conseil

Clearly analysing the future impact of the Brexit is a difficult exercise in this early stage. A lot of questions are not answered yet and all will depend on the agreements that will be negotiated between the EU and the UK. Those negotiations will not be easy.  Chancellor Angela Merkel already announced that the UK cannot get the same privileges as before without accepting the principles and obligations.

Considering what is said above it is important to note that caution is advised concerning contractual relationships. A good thing would be to reconsider and renegotiate some contractual clauses that are UK-related, such as choice of law or jurisdiction provisions and clauses relative to territorial application of the contract.

Heleen DE BRABANDERE                                                    Denis PHILIPPE