As with so much of the fallout from Brexit, the implications for dispute resolution here in Ireland will depend on what form Britain’s relationship with Europe takes in the future. Member states of the EU are automatically included within a legal framework set out in a number of Regulations which give certainty on issues such as jurisdiction, choice of law, service and recognition of judgments in contract and tort actions. However certain countries outside the EU, such as Norway and Switzerland, do also avail of certain elements of that framework by being signatories of analogous conventions such as the Lugano Convention on jurisdiction. If the UK enters into an analogous relationship with EU States (which must be likely) then a lot of the complications referred to in the following paragraphs can be overcome. As things stand, however, if Britain invokes Article 50 and ceases to be a member of the EU the following complications could arise:-
Some of the potential issues
- Issuing Proceedings against British Defendants: The rules of the Superior Courts provide that the leave of the High Court must first be obtained (by application in open Court before a Judge) ever before proceedings are issued against a foreign Defendant. There is a carve out from this requirement in relation to litigation against Defendants resident in EU states, however post Brexit this would not apply to UK Defendants. Accordingly post Brexit even the very act of commencing proceedings against UK Defendants here in Ireland could become more complicated and more costly at the very earliest stage.
- Service of Proceedings: Again this is a complication at the earliest stage of proceedings where post Brexit streamlined provisions set out in EU law for serving proceedings on entities in other member states would no longer apply and accordingly it would be necessary to obtain UK law advices in order to correctly serve proceedings on UK Defendants.
- Jurisdiction and choice of law: Absent clear provision in any contract with a UK entity regarding the jurisdiction and choice of law to apply in the event of a dispute then there is likely to be great uncertainty as to which country’s Courts, applying which law, will have jurisdiction. This accordingly could lead in such disputes to a race to litigate - and indeed the UK party could be able to bring anti-suit injunctions in the UK to prevent parallel proceedings in another jurisdiction.
- Enforcements of Judgments: Post Brexit the position when enforcing judgments in the UK would revert to the old common law provisions and accordingly it seems it would be necessary in enforcing an Irish judgment in the UK to commence proceedings afresh in the UK - rather than being able to rely on the Irish judgment itself (albeit the existence of the Irish proceedings would expedite the fresh proceedings in the UK).
- Common Law Precedent: Historically our judicial system has had great regard to judgments in other Common Law jurisdictions, and in particular in England and Wales, in determining Irish law on issues. From now on however it may be that considerable care will have to be taken when seeking to rely on England and Wales’ precedents given that in reaching determinations their judiciary will no longer have to have regard to any overarching obligations of EU law.
Practical steps for clients to take
- Don’t Unduly Delay – given that Article 50 has not yet been invoked by Britain it is highly unlikely any of these issues will arise until at earliest mid 2018. Accordingly, if you now have a cause of action against a British entity or you have judgment already against a British entity, it might make sense to move quickly in relation to such cause of action or judgment in order to avoid certain of the pit falls set out above.
- Contract Wisely – if presently in negotiations with a British entity it would make sense to carefully consider choice of law provisions and perhaps to push, more so than ever, for Irish jurisdiction and choice of law to be nominated. Alternatively Arbitration should be chosen on the default dispute resolution mechanism. Moreover, in order to avoid any difficulties with service in the event of a dispute, it would also make sense for an Irish entity to insist that an English entity now irrevocably nominate a set of English solicitors to accept service in the event that proceedings must issue.
- Don’t Panic! – Always remember these sage words from The Hitchhiker’s Guide. The reality is it is highly likely that even in the event that Article 50 is invoked that Britain will become a signatory to conventions such as or analogous with, the Lugano Convention, such that they essentially bring themselves back within the aforementioned frameworks governing jurisdiction, choice of law, service and enforcement of judgments. Equally however, it is good to understand the risks in the event that Britain does not so act.
For more information on the content of this article, please contact:
Ronan Geary, Partner - firstname.lastname@example.org +353 21 4802753