UK: Dispute Resolution Options Post-Brexit

Amidst all the uncertainty surrounding Brexit, the continuing relevance, power, and reliability of international arbitration as a dispute resolution mechanism remains a very welcome example of stability.

On 22 August 2017, the UK Government issued a paper containing proposals to establish a cross-border civil judicial co-operation framework between the European Union and the United Kingdom (the Future Partnership Paper). Because the framework of the future EU-UK relationship has yet to be defined, considerable uncertainties remain regarding certain aspects of cross-border litigation that are currently governed by EU Regulations.

In contrast with litigation and so many other areas, Brexit is, however, unlikely to affect the rules governing international arbitration proceedings. As a result, parties should opt for arbitration rather than litigation until such time as the rules applying to cross-border litigation involving the United Kingdom and the European Union post-Brexit are clarified.

THE UNCERTAINTY OF CROSS-BORDER LITIGATION

Numerous aspects of cross-border litigation within the European Union are currently regulated by instruments designed to facilitate access to justice by providing predictability and fostering judicial co-operation between Member States. The following are the main regulations that apply:

  • EU Regulation Rome I provides rules to determine which law should apply to contractual obligations in cross-border disputes involving parties from different EU Member States (except Denmark, which opted out). Accordingly, if parties to a contract have not chosen a law to govern that contract, the Rome I regulation will designate the law.
  • EU Regulation Rome II provides rules to determine which law should apply to non-contractual obligations in cross-border disputes involving parties from different EU Member States (again excluding Denmark).
  • EU Regulation Brussels I bis prescribes which court in the European Union has jurisdiction to decide a given cross-border dispute between parties from different jurisdictions in the EU.

The rules set forth in these (and other) EU instruments play a fundamental role in intra-EU litigation, because they provide parties with predictability with respect to the law that should govern their disputes and which jurisdiction will be competent to hear them.

As long as the United Kingdom remains part of the European Union, cross-border litigation involving a UK component will continue to be governed by these EU regulations. Upon Brexit becoming effective, however, this framework will cease to apply to such litigation under Article 50(3) of the Treaty on European Union.

The United Kingdom will therefore have to choose whether it wishes to apply different rules to such litigation than those set forth in EU law, or to adopt rules aligned with EU law. Given its stance in the Future Partnership Paper, the United Kingdom appears to be leaning towards the second option. The result would be rules that "reflect closely the substantive principles of co-operation under the current EU framework" (paragraph 19 of the Paper).

Needless to say, however, the choice is not the United Kingdom's alone. The European Union will also have to agree to put in place rules that are aligned with EU law.

The consequences of Brexit on cross-border litigation are likely to remain unknown for some time, but parties to contracts need some predictability now with respect to future UK-EU litigation.

The lack of predictability created for the United Kingdom by Brexit has led a number of other EU Member States (including, most recently, Belgium) to propose changes to their own court systems (including the introduction of English-language courts) to try to attract cases that would otherwise have been destined for the UK courts. Such proposals may, however, ultimately face the same uncertainty in relation to disputes involving nationals of the United Kingdom and other EU Member States as a question mark hangs over what rules will apply to enforcement of their judgments in the United Kingdom post-Brexit.

INTERNATIONAL ARBITRATION AS A GUARANTEE OF LEGAL CERTAINTY

The better answer, we believe, is to rely on arbitration agreements.

Unlike cross-border litigation, international arbitration is not subject to the EU instruments mentioned above. In particular, the Rome I and Brussels I bis Regulations expressly exclude arbitration from their scope.

International arbitrations conducted in London will instead continue to fall within the ambit of the English Arbitration Act 1996, which is not in any way dependent on EU law. In addition to providing a clear and comprehensive framework for international arbitration, the Arbitration Act 1996 is applied by English courts in a pro-arbitration fashion. This approach has contributed to establishing London as one of most successful locations for arbitration in the world. Accordingly, the legal framework that regulates arbitration proceedings and the enforceability of arbitral awards is unlikely to be adversely affected by Brexit.

To the contrary, parties conducting international arbitrations in London may, post-Brexit, again be able to ask the English courts to issue anti-suit injunctions to prevent their contractual counterparties from litigating before other EU Member State courts in breach of an arbitration agreement. The English courts are currently forbidden from issuing such anti-suit injunctions because it is considered by the Court of Justice of the European Union to be contrary to the EU Regulation Brussels I. This may perhaps change post-Brexit.

Nor will Brexit affect the recognition and enforcement of foreign arbitral awards in the United Kingdom. These will continue to be governed by the UK Arbitration Act 1996 and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (the New York Convention), which provides a clear and favourable set of rules for the recognition and enforcement of arbitral awards in all 157 signatory States (which include the United Kingdom, and all EU Member States), and by other international instruments that are not subject to EU laws.

International arbitration is undoubtedly the best available dispute resolution mechanism in the drafting of international contracts involving the United Kingdom and the European Union for those seeking legal certainty. It is one of the few areas that companies can rely on amidst the potential uncertainty of the post-Brexit world.

Dispute Resolution Options Post-Brexit

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions