Cross-border disputes involving parties in the EU and UK have taken on a new complexity as a result of Brexit. Whilst the Trade and Co-operation Agreement is silent on matters relating to civil judicial co-operation, it is hoped that, now that a deal has been reached, the UK's application to join the Lugano Convention may now progress with the EU's agreement.
Dispute resolution frameworks
Notwithstanding the potential for disruption, there are important areas of stability.
The Withdrawal Agreement between the UK and EU confirmed that certain provisions of EU law continue to apply to ongoing judicial proceedings which were commenced before the end of the transition period. Practically, this means in those circumstances, EU Member States will continue to uphold English jurisdiction clauses and to enforce any resulting judgments relating to proceedings that were issued before the end of the transition period. In addition, given the universal application of the Rome I and Rome II Regulations (concerning the law applicable to contractual and non-contractual obligations), with limited exceptions, EU Member State courts will continue to respect English governing law clauses in contracts.
UK's participation in international dispute resolution frameworks
There have also been some steps taken towards putting in place alternative arrangements. The UK Government has submitted its application to continue to participate in the Lugano Convention, and has acceded to the Hague Convention on Choice of Court Agreements 2005 as an independent contracting party. Whilst Hague provides a similar enforcement mechanism for English judgments in the EU (and vice versa) to the regime previously in place, it only applies where there is an exclusive jurisdiction clause in scope and in favour of the relevant court concluded after Hague entered into force and proceedings began after its entry into force in the relevant state. There are areas of uncertainty, including as to whether Hague applies during the period the UK was not an independent contracting party, and where the relevant exclusive jurisdiction clause was agreed before the end of the transition period.
Dispute resolution clauses
The well-rehearsed benefits of English law and the English court system are not affected by Brexit and risk (e.g., where the Hague Convention does not apply) can be excluded, without foregoing English law, by considering arbitration. Arbitration is regulated by a different system to English litigation, and is unaffected by the UK's exit from the EU.
For those seeking to protect their reputation against potentially defamatory statements, it is now, at least temporarily, harder to bring claims in this jurisdiction against foreign defendants:
- Before the end of the transition period, where the defendant was domiciled in the EU or a Lugano Convention country (Iceland, Norway or Switzerland), a claimant could sue i) in the place of the defendant's domicile for the harm caused worldwide; ii) in the place where the claimant had their "centre of interests" (normally their habitual residence), again for global harm; or iii) separately, in each jurisdiction where publication occurred, but in each case only for the harm caused in that jurisdiction (the "mosaic" approach).
- However, where the words complained of had been published online, the claimant was required to choose a single EU Member State/Lugano Convention country in which to sue for worldwide harm: either the defendant's place of domicile or the claimant's centre of interests.
- All other countries were caught by s.9 Defamation Act 2013 as then drafted, which prevented our courts from accepting jurisdiction for a defamation action against a person not domiciled in the UK or another EU Member State/Lugano Convention country unless the claimant could satisfy the court that, of all the places in which the statement complained of has been published, England and Wales was "clearly the most appropriate place". This envisaged a single, most appropriate jurisdiction and obviously made it more difficult to pursue a defendant outside the EU/Lugano Convention area, even for domestic claimants.
- The Civil Jurisdiction and Judgments (Amendment) (EU Exit) Regulations 2019 (SI 2019/479) came into force on 1 January 2021. The Regulations amend s.9 so that it now applies to all foreign defendants, not just those outside the EU/Lugano Convention area. In other words, the reach of s.9 has increased significantly. Although the UK has applied to accede to the Lugano Convention, even if ratified, there will be a gap of three months before it can come into force in relation to the UK. From now therefore, until any agreement is reached that restores the narrower scope of s.9, new defamation actions brought in England and Wales will face a higher bar against defendants in any other jurisdiction.