The European Commission has recently published a notice to stakeholders (here) on the withdrawal of the UK from the EU setting out its view on the legal situation after the end of the transition period in the fields of civil justice and private international law.
What does the Notice Consider?
The notice deals with a number of issues that will be of interest to stakeholders. These include:
- international jurisdiction
- applicable law in contractual and non-contractual matters
- recognition and enforcement of judgments
- the operation of specific European procedures such as the European Payment Order Procedure
- procedures for judicial cooperation between EU Member States eg on the taking of evidence or serving of documents
It examines how the relationship between the UK and the EU in these areas currently operates, and will operate after the end of the current transition period on 31 December 2020 (“Transition End Date”), pointing out certain significant differences in the legal landscape.
For example, it sets out the legal consequences of opening the main proceedings in an insolvency matter in the UK after, rather than before, the Transition End Date. It addresses the law applicable to contracts concluded or events giving rise to damage occurring before or after the Transition End Date. It also deals with the treatment of legal proceedings instituted both before and after the Transition End Date. On this last point, the effect of the Transition End Date may be mitigated for certain civil disputes if the UK accedes to the Lugano Convention in its own right. However, the EU’s consent is required for it to do so and it is not certain that consent will be granted. See our related briefing here.
Choice of Court Agreements
Significantly, the notice also sets out the Commission’s view that proceedings instituted in the UK courts after the Transition End Date on the basis of a choice of court agreement will no longer benefit from EU rules on the recognition and enforcement of judgments obtained in an EU Member State across other EU Member States. While the UK has signalled its intention to accede to the Hague Convention on Choice of Court Agreements with effect from Transition End Date, the notice states that the Convention will only apply between the EU and the UK in respect of those choice of court agreements concluded after the Convention enters into force in the UK as party in its own right to the Convention. The Commission makes the point that to date this Convention has been signed and approved only by the EU and not the UK so that the UK has been bound by this Convention only via its EU membership. This view is not shared by all UK commentators and may ultimately be tested before the domestic courts of EU Member States or the Courts of Justice of the European Union or, indeed, of another Contracting State to the Convention.
In light of the imminent expiry of the transition period, parties to contracts which contain a choice of court agreement designating the courts of a UK jurisdiction should ensure that they fully understand what this now means for them in practical terms in the event of a dispute with their counterparties. Where legal proceedings are being contemplated, and these involve any UK jurisdiction in any respect, parties should pause and consider the consequences of allowing the transition period to expire without taking action now.