Beyond Brexit: What is the position for cross-border disputes now?
Have the UK and EU entered any new agreement on cross-border civil litigation?
In short, no. The EU–UK Trade and Cooperation Agreement was signed on 30 December 2020, between the EU and UK. The agreement, however, is silent on future cooperation as regards cross-border civil litigation.
In April 2020, the Government applied for the UK to rejoin the Lugano Convention as an independent contracting state, having abandoned it would seem the ambition of a bespoke agreement with the EU.
Agreement from the EU has not been forthcoming so far. While it was anticipated (or perhaps hoped) that the EU would agree to the UK’s accession to the Lugano Convention once a trade agreement was reached, nothing so far has been reported on this front.
In the absence of agreement, what is the position?
On 31 December 2020, the Government published over 300 items of new and updated Brexit transition guidance, including “Cross-border civil and commercial legal cases: guidance for legal professionals”.
This guidance note reflects the position as widely discussed in the lead up to the end of the transition period. In summary:
Jurisdiction and enforcement
For transitional cases (i.e. those commenced prior to the end of the transition period), the Recast Brussels Regulation should continue to apply as it did before, both as to matters of jurisdiction and enforcement.
The position is a little less clear for the Lugano states, since the Withdrawal Agreement did not include similar transitional provision for the Lugano Convention as for the Recast Brussels Regulation. The UK has passed a statutory instrument which provides that, for its part, it will continue to apply the Lugano Convention rules to proceedings begun before the end of the implementation period, but it cannot dictate the approach of other Convention parties. The one exception is Norway, where an agreement recently was published on continued application and amendment of the Convention for the Reciprocal Recognition and Enforcement of Judgments in Civil Matters 1961.
For new cases (i.e. those commenced from 1 January 2021 onwards):
- If there is an exclusive jurisdiction agreement between the parties on or after 1 October 2015 and the chosen court is in a contracting party to the Hague Convention 2005 on Choice of Court Agreements (which includes all EU member states), for civil and commercial matters that Convention will likely apply.
- In the absence of this, it will be a matter of domestic law – in England this will be centred around the provisions on permission to serve out of the jurisdiction as contained in Practice Direction 6B of the Civil Procedure Rules (CPR) in particular and established principles applied by the English courts to determine the appropriate forum for a dispute. The rules governing recognition and enforcement of foreign judgments in cross-border disputes are generally contained in the common law unless there is a bilateral agreement in force with the relevant country on reciprocal recognition and enforcement of judgments.
- For consumer and employment claims, some specific provision on jurisdiction is made in sections 15B to 15E of the Civil Jurisdiction and Judgments Act 1982.
Governing law will continue to be determined in accordance with the long-standing principles in Rome I and II Regulations for contractual and non-contractual obligations respectively. The Regulations have been retained by the UK (and will also continue to be applied by EU Member States), therefore effectively preserving the status quo.
Service of proceedings
The EU Service Regulation no longer applies (except where documents were received before 31 December 2020), and instead the Hague Service Convention will apply. While not radically different, the EU Service Regulation is perceived as an upgrade on the Hague Service Convention, so the process may now become less efficient and more expensive for parties.
Similar to the position on service, the relevant EU instrument (the Evidence Regulation) no longer applies and the Hague Evidence Convention will apply. While the Hague Evidence Convention is similar to the Evidence Regulation in many respects, it is not as modern and is likely to be a less efficient (and therefore more expensive) procedure for requesting evidence as between Member States.
Have any amendments been made to the CPR?
Yes. The CPR were amended by the Civil Procedure Rules 1998 (Amendment) (EU Exit) Rules 2019 (2019/521) (CPR Exit SI) (as amended by SI 2020/1493). These SIs are in force with the rule changes having taken effect at the end of the transition period.
The White Book is stated to be under revision at present, while the text of the CPR online is yet to reflect the amendments. For example, CPR 6.33, which sets out where service may be effected out of the jurisdiction without the courts’ permission, still refers to the European regime, which is now out of date. For the time being, therefore, parties will have to work by reference to the SIs alongside the CPR.
Changes to CPR 6
Various amendments have been made to CPR 6 to reflect the fact that the European regime no longer applies (while also providing for proceedings issued on or before 31 December 2020 to be served outside the jurisdiction without permission where the court has jurisdiction under the European regime).
The result is that there will be a significant reduction in the number of cases where permission is not required from the English courts to serve out of the jurisdiction. To address this, a new provision – CPR 6.33(2C) – has been approved by the Civil Procedure Rules Committee, which will remove the need for permission where there is a jurisdiction agreement in favour of the English courts. This will be a welcome addition but is not yet in force, so permission in this instance (unless in scope of the 2005 Hague Convention) will still be required for the time being.
Other CPR changes
Various amendments have been made across the CPR in relation to references to the European regime. Of particular note are:
- Security for costs: where an application for security for costs is made under CPR 25.12, the court may make an order for security for costs provided it is satisfied the claimant is resident out of the jurisdiction but not resident in a state bound by the 2005 Hague Convention (currently the EU Member States, Singapore and Mexico). The amended version of CPR 25.13 removes any residency conditions relating to the Recast Brussels Regulation or the Lugano Convention.
- Witnesses, depositions and evidence for foreign courts (CPR 34): since the Taking of Evidence Regulation is repealed, the rules in Part III (Taking of Evidence - Member States of the European Union) are removed. This removes the ability to examine a witness in any EU Member State (except Denmark).
- Enforcement of foreign judgments (CPR 74): amendments to Part 74 remove rules governing applications to enforce or recognise judgments made pursuant to the Recast Brussels Regulation and the Lugano Convention in England and Wales. As the EEO Regulation is repealed, Part V (European Enforcement Orders) is also revoked. This removes the procedure regarding judgments on uncontested claims in the EU.
Are there practical steps parties should be taking with their contracts?
While the above is focused largely on procedural matters, and there is currently an element of “wait and see” with regard to accession to the Lugano Convention, there are a number of practical steps parties may wish to consider taking now, if they have not done so already. For example:
- Existing contracts should be reviewed to ensure that the provisions on jurisdiction are still fit for purpose. If jurisdiction was agreed on the basis of the enforcement framework provided by the European regime, for example, a party may wish to consider whether that agreement is still satisfactory. Or if there is no existing jurisdiction agreement, while never to be recommended, the potential issues this may pose a party will likely be more acute now in the absence of the mechanism offered by the European regime to determine and allocate jurisdiction where there is no agreement.
- Similarly, for any new contracts being entered into, careful thought should be given as to the appropriate jurisdiction agreement. If a party wishes to take advantage of the 2005 Hague Convention, for example, they should ensure that the agreement is one for the exclusive jurisdiction of the courts in a contracting state.
- For both existing and new contracts, parties would be well advised to have regard to provisions for service of process, in particular giving careful thought to having an agent for service appointed in the jurisdiction, thereby eliminating the potential need for permission to serve out of the jurisdiction and what may be a more involved process in terms of effecting service in an EU Member State now.
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