Preparing for No Deal Brexit

Preparing for No Deal Brexit | BDM Blog | BDM Law

We’ve tried to avoid cluttering up our blog with articles on how Brexit might impact on shipping and commercial litigation simply because nobody knows if, when and, if so, on what terms we might leave the EU. Some time ago we reported that Brexit would probably make no difference to cases being resolved in arbitration (which these days is about 80% of what we do) but there are of course serious issues for shipping and commercial disputes that are subject to the jurisdiction of the English Court. So here are the main points to be aware of if nothing changes between now and 29 March 2019 i.e. we exit with no deal:

  • All EU laws cease to have effect on disputes in the English Courts or subject to the jurisdiction of the English Courts. This may of course be irrelevant if there is no EU element to the case. However, clients seeking to enforce English judgments in the EU or obtain relief in the EU will be affected.
  • Certain bilateral treaties and conventions which pre-date EU membership (for example on reciprocal recognition and enforcement of judgments) may exist between the UK and individual EU member states. To find out whether this is the case, you will need to take legal advice here and from a lawyer in the relevant EU state.
  • The UK will accede to 2005 Hague Convention on choice of court agreements on 1 April 2019. This means that from that date all EU member states will be obliged to give effect to exclusive choice of court agreements in favour of the English courts entered into after that date and to enforce the resulting judgment. There is a 2 day lacuna from 29 March 2019 to 1 April 2019 but at least from 1 April 2019 onwards there will be some comfort for those with jurisdiction clauses specifying the English courts.
  • Although EU regulations dealing with service of documents and taking of evidence cease to apply, the Hague Conventions on service of documents (1965) and taking of evidence (1970) will offer some relief.
  • If an existing court case is decided after 29 March 2019 and there is an EU element (e.g. one or more EU defendants) then the judgment cannot be enforced under the existing EU legislation.
  • As the Brussels I Regulation will cease to be effective between the UK and EU27, then the English courts will have to fall back on pre-existing common law rules for the recognition and enforcement of foreign judgments. Likewise, if clients obtain an EU judgment after 29 March 2019 then they cannot automatically enforce that in the UK. They would have to take legal advice on the common law position.
  • Crucially, the Insolvency Regulation will no longer be applicable between the UK and EU27 member states. An insolvency practitioner appointed in the UK will therefore not be automatically recognised in the EU. This could lead to insolvency proceedings being initiated in multiple EU jurisdictions to protect insolvent companies and stay ongoing proceedings in those jurisdictions. The fact that the UK has signed up to the UNCITRAL Model Law on Cross Border Insolvency (1997) and has enacted the 2006 Cross Border Insolvency Regulations (well known to all of us involved in shipping cases) does not assist as only a few EU countries have ratified the Model law.

If clients have ongoing litigation or prospective litigation pending with an EU element then it would be wise to take legal advice on the potential impact of a no deal Brexit as this becomes more and more likely.

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