With question marks over the UK as a place of jurisdiction, one option would be
to replace the present arrangements with the Lugano Convention
The Brussels Regulation
The Brussels Regulation (1215/2012) determines which EU member
state court has jurisdiction in a dispute and ensures that
judgements will be recognised and enforced without the need for
separate proceedings in EU member states. Once the UK formally
exits the EU the Brussels Regulation will cease to apply for the
UK. It is not clear what approach the UK will follow to replace the
Brussels Regulation. What does this mean for litigants?
If the UK does not comprehensively replace the Brussels
Regulation the recognition and enforceability of English judgements
in Europe may depend on the national laws of the country where
recognition and enforcement is being sought. As a result, the
process of recognising and enforcing English judgements in European
countries may take longer, cost more and be more diffi cult. In
particular, local law advice may be required and create additional
costs for litigants. This may discourage parties from litigating in
As long as uncertainties with replacing the Brussels Regulation
remain contractual parties may consider revising and renegotiating
existing jurisdiction clauses conferring jurisdiction on UK courts.
Contractual parties may even argue that Brexit constitutes a force
majeure event or a material adverse change and that jurisdiction
clauses in favour of the UK are void.
For new contracts, jurisdiction clauses need to be drafted
deliberately and the consequences of Brexit on international
litigation need to be incorporated. To ensure the recognition and
enforcement of judgements in the EU parties may consider replacing
UK jurisdiction clauses with clauses in favour of other countries
with well-reputed jurisdictions or with arbitration clauses.
Alternatives to the Brussels Convention
The UK is still party to the Brussels Convention (72/454/ EWG)
that was in force in the country in 2001 and currently only applies
to Aruba and French overseas territories. The Brussels Convention
will re-emerge because of Brexit.
However, since it is outdated and would only apply between the
UK, the pre-2004 members of the EU and its various overseas
territories, the UK will undoubtedly want to replace the Brussels
Convention with a more up-to-date international agreement.
The UK could seek to accede to the Hague Convention on exclusive
choice of court agreements, which applies to contracts containing
exclusive jurisdiction clauses. Since many agreements (eg fi
nancial ones) are non-exclusive, the Hague Convention would not
comprehensively replace the Brussels Regulation.
A more likely option for the UK is to replace the Brussels
Regulation with the Lugano Convention (LugC). Current parties to
the LugC are the EU, Norway, Denmark, Iceland and Switzerland.
Switzerland initiated the establishment of the original LugC to
connect with the successful European civil procedure governed by
the Brussels Convention. The LugC signifi cantly facilitates
jurisdiction disputes within Europe, in particular for countries
outside the EU and the European Economic Area (EEA) such as
Switzerland. The LugC differs from the Brussels Regulation in that
it does not contain a rule to prevent torpedo actions. Apart from
this the LugC is almost identical to the Brussels Regulation and
may further converge, with future amendments of the LugC.
Thus, the LugC may be a considerable option for the UK. The UK
will need the consent of all parties to the LugC (including the EU)
to join the LugC, if it does not rejoin the European Free Trade
Association (EFTA) at the same time.
Contractual parties are generally advised to include
jurisdiction clauses to reduce uncertainty. However, Brexit has
shown that political changes may cause uncertainty for jurisdiction
clauses in favour of the UK.
Norway, Denmark, Iceland and Switzerland, being outside the
EU's internal civil procedural system, have had positive
experiences with the LugC. The LugC may also be the solution for
the UK to mitigate international litigation risks associated with
Brexit. For the time being, contractual parties need to be aware of
the impact of Brexit on the UK as place of jurisdiction.
Previously published by The Lawyer | 25 July 2016
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