Friday, 14 September 2018

The no-plan plan – MoJ sets out disputes contingency guidance for a no-deal Brexit

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The no-plan plan – MoJ sets out disputes contingency guidance for a no-deal Brexit

As the UK careens towards the March 2019 deadline, the Government has released a contingency plan outlining rules for cross-border European disputes in the event of a no-deal Brexit.

Guidance was published yesterday (13 September) by the Ministry of Justice (MoJ), with the main conclusion that if no arrangement is reached with the EU, the UK will have to rely on domestic common law rules currently applied to cases involving non-EU countries for cross-border European disputes.

Currently the UK applies reciprocal EU rules to determine the jurisdiction of a given civil dispute, which country’s laws apply in a dispute, how judgments may or may not be enforced in different countries, and how cross-border legal procedural matters are handled.

In a no-deal scenario these laws will be repealed, but the UK will continue to follow existing international agreements, such as the Hague Conventions, which outline some dispute frameworks but are less comprehensive than EU guidelines. The guidance note also stated that the UK would retain Rome I and II rules, which dictate the that law applies in both contractual and non-contractual matters and largely do not depend on reciprocity.

And in an announcement unlikely to inspire confidence, the MoJ recommended that those likely to be involved in civil cases on 29 March 2019, should seek legal advice: ‘Broadly speaking, cases ongoing on exit day will continue to proceed under the current rules. However, we cannot guarantee that EU courts will follow the same principle, nor that EU courts will accept or recognise any judgments stemming from these cases.’

Ed Crosse, dispute resolution partner at Simmons & Simmons and president of the London Solicitors Litigation Association, told Legal Business: ‘This “guidance” in effect provides no practical advice to parties in the UK who may be concerned about where their disputes may be heard, and whether a decision from the courts of England and Wales will be recognised and enforced in a member state court after Brexit.’

For others, there really is nothing to worry about. Stewarts commercial litigation lead Clive Zietman commented: ‘The idea that there will be no mutual enforcement between our country and Europe is fanciful. Something will be agreed. People forget there was a system in place before we were even in the EU.’

While a no-deal scenario is not a certainty, it is contributing to a sense of unease around the future status of London as a global disputes hub. To take advantage of the uncertainty, Paris introduced an English-language common law commercial court in the summer, offering lower court fees and guaranteed enforceability of judgments throughout the EU.

tom.baker@legalease.co.uk