Brexit - London will continue as a leading dispute resolution centre
The UK is set to retain its status as a leading commercial dispute resolution centre, notwithstanding Brexit. Many of the reasons why parties choose the English courts, such as their reputation for consistency, transparency and expertise in dealing with large-scale commercial disputes, are not related to EU membership.
The aim behind the legislation withdrawing the UK from the EU is that there is no great legal change, or 'cliff-edge', on Brexit. For example, whilst the supremacy of EU law will end after exit day, EU law will be converted into UK law, so that the UK's legislation retains a functioning statutory framework.
Issues important to dispute resolution have been addressed as follows.
Enforcing Court Judgments
It is crucial that, on Brexit, foreign judgments will be enforceable in the UK and that English judgments will be enforceable in the EU. The latter particularly given the popularity amongst the international commercial community of the choice of English law and English courts.
The current EU regime on the enforcement of judgments, under the Recast Brussels Regulation (Regulation (EU) No. 1215/2012), ensures enforceability amongst Member States. It is the overwhelming view in the UK, recognised by the government, that arrangements equivalent to the Recast Brussels Regulation must be agreed with the EU and entered into on Brexit, or by way of transitional arrangements, in order to avoid any uncertainty for business.
Even absent such agreement with the EU, the recognition and enforcement of court judgments will continue post-Brexit:
- the UK is unique in currently having reciprocal arrangements not only with the EU, but also with former Commonwealth countries
- the UK may agree bilateral treaties with particular states
- the UK may sign and ratify in its own right, as distinct from as a member of the EU, both the 2005 Hague Convention on the Choice of Court Agreements - in respect of the EU, Mexico and Singapore (relevant to exclusive jurisdiction clauses) and the Lugano II Convention - in respect of the EU, Norway, Iceland and Switzerland
- the residual framework of a precursor to the Recast Brussels Regulation, namely the Brussels Convention, which became part of UK law in 1982, would apply
- if the Convention were renounced by the UK, the framework for the enforcement of foreign judgments under the common law would remain.The common law is no backwater in this respect; it is for example the present method of enforcing all US court judgments in England.
Exclusive Jurisdiction Agreements – Choice of Court
It is clearly also crucial that parties have certainty as to where any dispute between them will be resolved and that an agreement to proceedings being heard before a particular national court will be respected. Although concerns have been expressed that absent an agreement on Brexit, EU Member States will apply their own national laws as to whether parties have consented to English court jurisdiction, such concerns are likely exaggerated; those national laws may not substantially diverge from EU law in any event.
Further, in extremis, the English courts would retain their ability to issue anti-suit injunctions, restraining foreign proceedings brought in breach of an exclusive jurisdiction agreement conferring exclusive jurisdiction on the English courts.
In summary, English courts will continue to respect exclusive jurisdiction agreements. Similarly, courts in Member States will continue to respect the choice of English court jurisdiction, albeit under their own rules.
Choice of Law
The Rome I Regulation (Regulation (EU) No. 593/2008) governs choice of law in contracts and the Rome II Regulation (Regulation (EU) No. 864/2007) enables parties to select the applicable law of non-contractual obligations. However, upon Brexit, both will very likely be converted into UK law and will be binding on the English courts. That is the recommendation of the UK Bar Council.
Service of Claims
The current EU regime on service of claims by claimants on defendants is the Service Regulation (Regulation (EC) No. 1393/2007). Absent an agreement with the EU, on Brexit methods of service permitted by the existing frameworks of the English common law and the Hague Service Convention can be used.
CJEU Case Law
There are important regulatory, economic and rights-based reasons in favour of continuity and legal certainty which underline the ongoing relevance of CJEU case law post-Brexit. EU rights and EU-derived laws are likely to straddle the exit date and may continue to run for a considerable time thereafter – for example, those concerning public works concessions, public service contracts, mortgage loans and pension rights. However, various legal tools may be used to refer to and interpret EU principles post-Brexit in order to take them into account, but to afford them no higher status than any other foreign court.
Brexit is likely to have no discernable effect on international arbitration in London. The advantages of international arbitration in London do not derive from EU law, or from membership of the EU.
The advantages are from pro-arbitration laws, confidentiality, expertise and infrastructure and the relative ease of enforcement of arbitral awards globally, in 157 states, under the New York Convention. Respondents to a 2015 survey by White & Case and Queen Mary, University of London revealed that London was both the most used and the preferred seat for international arbitration.
If you would like some further information on how the points raised could impact you, please contact James Wingfield.