Brexit: Implications For Rules On Jurisdiction And Enforcement

Author:Mr Jonathan Scrine
Profession:Nabarro LLP
 
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Summary and implications

Of the numerous commercial issues to get to grips with as the UK prepares to leave the EU, the consequences for intra-EU litigation will not understandably be at the forefront of businesses' minds.

This article looks at the impact of some potential rule changes to be aware of, specifically those affecting the location where claims are heard and the enforceability of court judgments. In a separate article, Stefanie Day discusses the wider implications of Brexit for cross-border litigation in the EU.

Jurisdiction

EU law provides a harmonised system for deciding which member states' courts have jurisdiction over legal proceedings in civil and commercial matters. The courts of a particular member state will have jurisdiction if the parties have agreed that they should do so. Otherwise, the courts of the defendant's domicile will have jurisdiction (subject to some exceptions). This principle safeguards defendants against member states exercising jurisdiction over them beyond their geographical territory.

If proceedings are commenced in the courts of more than one member state, the "court first seised" has priority to decide its own jurisdiction. If jurisdiction is established by that court, any other court is effectively prevented from hearing the claim. The "court first seised" principle is subject to an important caveat which gives priority to the courts of another member state if the parties agreed that it should have exclusive jurisdiction.

When the UK exits the EU, the current rules giving effect to jurisdiction agreements in favour of the English courts will no longer apply. Those agreements are still likely to be upheld by the English courts. However, where proceedings are initiated in one of the 27 remaining member states, jurisdiction will be decided by that member state's national laws. Similarly, the basic principle that a defendant should be sued in their place of domicile will also cease to have effect. It would then be possible for other member states to exercise jurisdiction over UK-domiciled defendants on national law grounds. UK defendants would be compelled to defend themselves before the courts in those member states. The above scenarios, should they transpire, would engender substantial uncertainty.

One potential option is for the UK to accede to the 2007 Lugano Convention between the EU and EFTA states (other than Liechtenstein). This is similar to the existing regime and is also founded on the...

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