European Union: Application Of The Brussels Regime Post-Brexit

Last Updated: 24 January 2019
Article by Herbert Smith Freehills

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.

The UK position

The draft Civil Jurisdiction and Judgments (Amendment) (EU Exit) Regulations 2019 (the “Exit Regulations”), published in December, provide that:

  • In relation to questions of jurisdiction, UK courts will generally apply the current rules under the Brussels regime where their proceedings were commenced pre-Brexit and have not been concluded by exit day.
  • In relation to enforcement of judgments, UK courts will apply current rules where the EU member state court’s judgment was given in proceedings commenced pre-Brexit (in contrast to the EU’s position in relation to enforcement of UK judgments – see below).

The explanatory memorandum to the Exit Regulations recognises that the UK cannot legislate for how other EU member states will treat questions of jurisdiction and enforcement involving UK domiciled parties. It notes that such countries will be under no obligation to apply the same rules to cross-border cases involving UK parties and almost certainly will not do so. However, the Exit Regulations seek to minimise the disruption in cross-border cases which straddle exit day, so far as the UK can do so on a unilateral basis.

With that in mind, the Exit Regulations introduce an exception to the general position on jurisdiction for proceedings commenced pre-Brexit. That is, if proceedings are commenced in a UK court pre-Brexit, and proceedings involving the same cause of action and between the same parties are subsequently commenced in an EU member state court, the UK court may decline jurisdiction after exit day if it would be unjust not to do so – ie to avoid litigants facing parallel proceedings if the EU court is unable or unwilling to stay its proceedings.

Apart from these transitional provisions for proceedings commenced pre-Brexit, the Exit Regulations generally repeal the Brussels regime (including, most importantly, the recast Brussels Regulation and the Lugano Convention) so that the common law rules on jurisdiction and the enforcement of judgments will apply in cases that would currently be covered by the Brussels regime:

  • Under these rules, the English court will generally take jurisdiction if proceedings can be served within the jurisdiction, even based on the defendant’s temporary presence, or if the claimant can obtain permission to serve proceedings outside the jurisdiction, on grounds specified in the relevant court practice direction. In each case, the court will generally decline jurisdiction if the English court is not the appropriate forum for the resolution of the dispute – a question which is generally irrelevant where jurisdiction is based on the rules in the recast Brussels Regulation.
  • Enforcement of judgments under the common law requires bringing a fresh action to sue on the judgment as a debt, and applies only to money judgments and only where the foreign court had jurisdiction based on limited grounds. There also also separate statutory regimes for reciprocal enforcement of judgments under the Administration of Justice Act 1920 and the Foreign Judgments (Reciprocal Enforcement) Act 1933, but the coverage of EU member states and Lugano Convention states under these regimes is limited.

The rules in the recast Brussels Regulation relating to jurisdiction are however retained in: cases brought by and against UK domiciled consumers (so that the consumer can bring proceedings where he/she is domiciled, as well as the part of the UK where the supplier is domiciled, but the consumer can only be sued where he/she is domiciled); and cases brought by or against UK domiciled employees, or by employees working in the UK or engaged by a UK business (so that the employee can bring proceedings in the part of the UK where the employer is domiciled, or where it is or was working, or where the business that engaged the employee is situated, but the employee can only be sued where he/she is domiciled).

These provisions will apply regardless of whether the supplier or employer is domiciled outside the UK or indeed the EU. In relation to a non-UK domiciled supplier or employer, if the dispute arose out of the operations of its UK branch, agency or establishment, it will be deemed to be domiciled in the relevant part of the UK. The provisions in the recast Brussels Regulation relating to the domicile of corporations or associations are also retained for the purpose of determining domicile in these circumstances, so that a supplier or employer that is a corporation will be domiciled where it has any of its statutory seat, central administration, or principal place of business.

The EU position

The EU’s Notice to Stakeholders, Withdrawal of the United Kingdom and EU rules in the field of Civil Justice and Private International Law, published on 18 January 2019, provides that:

  • In relation to questions of jurisdiction, where proceedings involving a UK domiciled defendant are pending with an EU member state court on exit day, the current rules will apply. The notice is silent about the position where the defendant is not UK domiciled but there are prior proceedings pending in a UK court, or there is an exclusive jurisdiction clause in favour of a UK court.
  • In relation to enforcement of judgments, EU member state courts will not apply the current rules to UK court judgments unless it has completed an exequatur procedure before exit day, even if the judgment was handed down before exit day or the enforcement proceedings were commenced before exit day.

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.

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