As the new legal year starts in London, we’re running a short series of posts covering developments and cases you might have missed over the summer. This first post in the series looks at the UK and EU position papers on Judicial Cooperation in Civil and Commercial Matters.
Since the Brexit Referendum of June 2016, there has been uncertainty as to how the current conflict of laws regimes concerning civil and commercial matters will change. (Other civil matters are outside the scope of this brief note.)
Until recently, there had been no indication from governmental levels as to the proposals both for the wind-down of the current regime and for the future basis of judicial cooperation (if any) between the UK and EU Member States. This summer saw the publication of position papers by both the EU and the UK. On 12 July 2017, the EU published its Position Paper on Judicial Cooperation in Civil and Commercial Matters. On 22 August 2017, the UK published its paper entitled “Providing a cross-border civil judicial cooperation framework: a future partnership.”
Both papers set out proposals for the “wind-down” period. The EU paper makes no proposals for any new relationship between itself and its former member, the UK. The UK makes some high level proposals in this regard.
There is a significant amount of overlap between the UK and the EU proposals for wind-down. Importantly, the UK stresses that it wishes its wind-down proposals to apply even in a “no deal” scenario. The parties seem to be making broadly the same proposals on the following points:
- Jurisdiction: Existing EU rules as at withdrawal date to determine court jurisdiction in all legal proceedings instituted before the withdrawal
- Applicable law: Existing EU rules as at withdrawal date to cover contractual obligations in contracts concluded before the withdrawal date.
- Choice of forum: Both the UK and EU state that choice of forum made prior to the withdrawal date should be assessed under the EU rules existing at the withdrawal date. The UK goes further and suggests that existing rules as at withdrawal date should govern recognition and enforcement of any resulting judicial decision, where a dispute arises to which such a choice applies, whether before or after withdrawal date.
- Recognition and enforcement: Both the UK and EU state that the existing EU rules to govern recognition and enforcement of judicial decisions are to apply to judicial decisions issued before withdrawal date. The UK again goes further and proposes that existing rules apply to proceedings commenced before withdrawal date but where the decision is issued after the withdrawal date.
In respect of a possible lacuna arising from proceedings started but not concluded (or not at a decision-making stage) before withdrawal date, the EU suggests that negotiation is needed as to the procedural stage to be reached to allow application of rules existing at withdrawal date. In other words, the EU suggests that there is a need for a cut-off point at which the rules at withdrawal date would cease to apply. UK’s position seems to promote greater certainty, but risks a very long “tail” in proceedings. The EU position may truncate the “tail”, but absent an agreed date/ stage of proceeding does not provide as much certainty.
A new regime
The EU does not make proposals for a new regime. The UK wishes to reach “new close and comprehensive arrangements”, which will operate on a basis of reciprocity. It indicates that it intends to incorporate into domestic law Rome I and II on choice of law and applicable law in contractual and non-contractual matters. It further indicates that it will seek continued participation in the Lugano Convention, as regards its relationship with Norway, Iceland and Switzerland. It will also seek continued participation in those Hague Conventions to which the UK is currently party by means of its EU membership. Interestingly, the position paper makes express reference to the UK joining in its own right the Hague Convention on Choice of Court Agreements 2005.
At the same time, the UK advises that it will be leaving the “direct jurisdiction” of the EU. It nevertheless states, that it may need to take into account “regional legal arrangements” going forwards, including the fact that the CJEU is the ultimate arbiter of EU law within the EU.
Practitioners may be reassured by the degree of unity in the wind-down proposals made by both the EU and the UK. It is also interesting to note the UK’s statement that it would seek the application of these wind-down proposals even if no overall deal was reached. Nevertheless, the way forward after withdrawal day remains uncertain. There may be a hint that the Hague Convention on Choice of Court Agreements will become more important going forward (at least as a stop gap measure whilst a “new and comprehensive” arrangement is negotiated).