Although it doesn’t attract as many tabloid headlines as other ‘negotiating Brexit’ issues, a successful resolution to the question about the future enforcement of judgments is vital. The value of judgments from the UK Courts will be impacted if successful litigants are less able to enforce them easily in the post-Brexit EU27. And this isn’t only a concern for those going into bat for the UK in the Brexit negotiations: remaining Member States will also need to ensure that the judgments of their courts can be enforced effectively in the UK.
Currently, the UK is party to an EU-wide system for the recognition and enforcement of foreign judgments as a result of the 2012 Brussels Recast Regulation. The Lugano Convention extends this system beyond the EU to include Norway, Iceland and Switzerland. Although, in practice, enforcement may not be as trouble-free as commentators sometimes suggest, it is relatively easy to enforce a judgment from one Member State in another.
There are several ‘negotiating Brexit’ options to deal with enforcement of UK judgments in the EU27 and vice versa, but whatever the UK wishes to achieve will require reciprocity. The options include:
- an agreement between the UK and the EU to continue to apply the Brussels Recast (albeit having ‘Brussels’ in the name doesn’t help with selling this option to prominent Brexiteers…);
- the UK acceding to the Lugano Convention (the UK is currently only party to Lugano as an EU Member State);
- joining The Hague Convention on Choice of Court Agreements; or
- doing nothing.
Anything which preserves the supremacy of the Court of Justice of the European Union and requires the UK Courts still to have due regard to judicial decisions from Luxembourg (rather than ‘restoring sovereignty’ to the UK) risks being politically unacceptable. Equally, doing nothing will be unpalatable to business and consumers alike as it would cause significant uncertainty in the enforcement of judgments out of and into the UK. For commercial clients, the sooner a decision is made the better, but the reality is that there will be uncertainty for quite some time. In this period, potential litigants will be left to work out whether they should:
- take a risk on enforcement as other factors (such as the calibre of the judiciary, procedural efficiency, an openness to the use of technology to control the cost of disclosure, and speed to judgment) tip the balance in favour of continuing to litigate in the UK Courts?
- put in contracts now a “Brexit trigger clause” (essentially, wording to enable parties to use a dispute resolution forum other than the UK Courts if, when a dispute arises, there is no reciprocal post-Brexit arrangement for the enforcement of judgments)?
- opt for a London seat arbitration instead of a London Court?
As if this wasn’t complex enough, there’s also the awkward question of what would happen in terms of judgment recognition between an independent Scotland and the remaining legal jurisdictions of the United Kingdom (the UK3?) and the EU27.