Now that the UK and the EU have agreed a further extension of Article 50 until 31 October 2019, parties have more time to consider, and in some cases reduce, the potential impact of a no deal Brexit on any court proceedings.
Anna Pertoldi published a post on Practical Law’s Dispute Resolution blog back in January which considered what litigants needed to know if there was a no-deal Brexit on 29 March 2019. She has recently published a further post which looks at where we are now, given the recent extension. Click here to read the latest post (or here for the Practical Law Dispute Resolution blog homepage).
On Friday last week (29 March 2019), the depositary for the 2005 Hague Convention on Choice of Court Agreements issued a notice communicating that the UK’s accession to the Convention is suspended until 13 April or 23 May 2019, depending on the date of the UK’s exit from the EU, following a declaration to that effect received from the UK government last Thursday. The intention is that the accession should take place the day after the UK’s exit from the EU, to achieve continuity in the Convention’s application to the UK following Brexit (when the UK will cease to be a party to Hague by virtue of its EU membership).
The UK deposited its instrument of accession to the Convention in December 2018 (see this post) with the intention that the Convention would come into force for the UK on 1 April 2019 (in accordance with article 31 which provides for the Convention to enter into force on the first day of the month following the expiration of three months after the relevant instrument is deposited). That would have left a short “gap” in the Convention’s application to the UK following the original Brexit date of 29 March. Assuming there are no objections to the recent suspension of the UK’s accession, it seems that such a gap may now be avoided.
However, there remains some uncertainty over whether other contracting states to the Convention will apply Hague rules where an exclusive English jurisdiction clause was agreed before the UK re-joined Hague in its own right, even if the clause was agreed when the UK was party to Hague by virtue of EU membership (referred to as the “change of status” risk).
Click here for our recently published decision tree aimed at helping to determine which rules will apply to enforcement of English judgments in the EU27 post-Brexit – whether the current rules in the recast Brussels Regulation, or the 2005 Hague Convention, or the local rules in each EU27 country. [NOTE: Linked version amended as at 9 April 2019]
Amidst the ongoing uncertainties in relation to both the nature and timing of Brexit, we have published a new decision tree on enforcement of English judgments in the EU27 post-Brexit. It is intended to act as a quick reference guide to help determine which rules will apply to enforcement of a judgment post-Brexit – whether the current rules in the recast Brussels Regulation, or the 2005 Hague Convention on Choice of Court Agreements, or the local rules in each EU27 country. Please click on the image below to access the document. [NOTE: Linked version amended as at 9 April 2019]
The High Court has rejected an argument that the European Medicines Agency’s (EMA’s) lease of premises at Canary Wharf will be frustrated as a result of the UK’s withdrawal from the EU: Canary Wharf (B4) T1 Ltd and others v European Medicines Agency  EWHC 335 (Ch).
The EMA argued that, as a result of Brexit, and as a matter of EU law, it would lack capacity to make use of the premises or perform its obligations under the lease, and therefore the lease was frustrated under English law. The judge rejected the EMA’s case that it would lack such capacity under EU law, and in any event found that an intervening lack of capacity under foreign law, after the contract had lawfully been entered into by the relevant foreign party, would not be relevant to questions of frustration under English law.
Overall, the decision illustrates the uphill struggle that is likely to face a party seeking to establish that its contracts are frustrated as a result of Brexit. The EMA is in a fairly unique position, as a European agency with good reasons to be located in an EU member state – even if the judge rejected its case about a broader lack of capacity to make use of premises located elsewhere – and it could not succeed in establishing its case on frustration. In principle, however, the decision leaves open the possibility of establishing frustration where a party is able to show that, as a result of Brexit, it will be deprived of all or substantially all of the benefit of a contract, or that it will simply not get what it bargained for, rather than performance merely becoming more onerous or inconvenient.
The EMA is reported to be studying its options for appeal, so this may not be the last word on the issue.
On Wednesday 27 February 2019 (1.00 – 2.00pm GMT), Anna Pertoldi and Gary Milner-Moore will deliver the latest in our series of webinars for Herbert Smith Freehills clients and contacts spotlighting legal and practical issues relevant to litigating cross-border disputes.
This webinar will examine a range of recent developments affecting cross-border litigation, including:
- The latest on Brexit’s likely impact on jurisdiction, choice of law and enforcement of judgments, viewed from both a deal and no-deal perspective
- A selection of recent judgments including on jurisdiction clauses; enforcing orders out of the jurisdiction; challenging jurisdiction and extraterritorial application of regulators’ powers
The government has published a draft statutory instrument, the Civil Procedure Rules 1998 (Amendment) (EU Exit) Regulations 2019, which makes amendments to the CPR that are consequential on the various other civil justice measures that are to be implemented in the event of a no deal Brexit. These include, most importantly, the disapplication of the recast Brussels Regulation and the Lugano Convention in relation to questions of jurisdiction and enforcement of judgments (as outlined here), as well as the disapplication of the EU Service Regulation and Taking of Evidence Regulation – in each case subject to transitional provisions.
The CPR amendments, which will only take effect if there is a no deal Brexit, include sweeping changes to CPR Part 6 in relation to service of documents and Part 74 in relation to enforcement of foreign judgments, as well as changes to other rules such as the provisions in Part 25 relating to security for costs. The most significant amendments are outlined below. Continue reading
If the UK leaves the EU without a deal on 29 March, what impact will that have on court proceedings? Different questions arise depending on the stage reached in the disputes process.
Anna Pertoldi has published a post on Practical Law’s Dispute Resolution blog which considers what a no-deal Brexit would mean for disputes and what questions businesses should be asking their lawyers to advise on. Click here to read the post (or here for the Practical Law Dispute Resolution blog homepage).
The government has published a draft statutory instrument addressing, among other things, the question of how the UK courts will, post-Brexit, treat questions of jurisdiction involving EU member states and the enforcement of judgments given by EU member state courts, assuming that the UK leaves the EU without a withdrawal agreement. The European Commission has also published a notice to stakeholders addressing the position of EU member state courts on these questions. The key provisions are summarised below. Continue reading
On 28 December 2018, the UK deposited its instrument of accession to the Hague Convention on Choice of Court Agreements 2005. The Convention will therefore come into force for the UK on 1 April 2019, in accordance with article 31 of the Convention which provides for it to enter into force on the first day of the month following the expiration of three months after the relevant instrument is deposited.
The government had previously declared its intention to sign up to the Convention with effect from 1 April, in case the draft withdrawal agreement that has been agreed between the UK and the EU is not ultimately entered into. The deposit of the instrument of accession now assures that this will take place.
If the withdrawal agreement is entered into, the UK will withdraw the instrument of accession. In that case, during the transition period provided for in the withdrawal agreement, until the end of December 2020, the UK will be treated as an EU member state for the purposes of the Convention.
For more information on the impact of the UK’s accession to the Hague Convention on jurisdiction and enforcement of judgments post-Brexit, see our post Brexit, deal or no deal: A litigator’s perspective.
Over the past couple of weeks, the government has published the final text of the draft Withdrawal Agreement setting out the arrangements for the UK’s withdrawal from the EU on 29 March 2019 and the draft Political Declaration on the future relationship between the EU and the UK. This is therefore a good opportunity to consider the impact of Brexit from a litigator’s perspective, whether or not a withdrawal deal is reached. (Although the deal has now been approved by EU leaders, it still faces highly uncertain votes in the UK Parliament.) So, what are the implications for English civil litigation?
With a deal
The draft Political Declaration does not contain anything of particular relevance so far as English civil litigation is concerned, focusing instead on matters such as trade and economic cooperation, law enforcement and criminal justice, foreign policy, and security and defence. This may not be seen as surprising, as the issue of civil judicial cooperation is usually dealt with outside of free trade agreements and we understand that the EU and UK did not discuss its inclusion, but it is nonetheless disappointing not to at least reference a shared objective to maintain cooperation in this area.
The draft Withdrawal Agreement is more significant, from a litigation perspective. It preserves various provisions relating to civil cooperation for the duration of a transition period to be established by the agreement, through to 31 December 2020. In particular:
- By article 66, current rules on applicable law in contractual and non-contractual matters under the Rome I and Rome II Regulations (Regulations 593/2008 and 864/2007) will apply to contracts concluded, or events giving rise to damage, before the end of the transition period.
- By article 67, current rules on both jurisdiction and enforcement of judgments under the recast Brussels Regulation (Regulation 1215/2012) will apply where proceedings are commenced before the end of the transition period.
- By article 68, current provisions relating to service and the taking of evidence (under Regulations 1393/2007 and 1206/20011) will apply where the relevant document for service or request for the taking of evidence was received before the end of the transition period.
After the end of the transition period, how these matters are to be dealt with will depend on what arrangements (if any) are agreed during the transition period. It is to be hoped that, in relation to jurisdiction and enforcement at least, something can be agreed which broadly mirrors the current arrangements under the recast Brussels Regulation or, at a minimum, an agreement can be reached for the UK to participate in the Lugano Convention. The UK government has previously indicated that this is its intention (see here).
Without a deal
If, however, the UK leaves the EU on 29 March without a deal, there clearly will not be time to put in place any such arrangements before the UK’s exit. In those circumstances, the position will be as summarised below. Continue reading