The impact of Brexit cuts across many sectors, but perhaps nowhere is it more keenly felt than in cross border litigation. The end of the transition period on 31 December 2020 saw the UK leave the Brussels I recast regulations and Lugano Convention. The consequence is that insurance claims brought against EU and Lugano Convention state domiciled defendants are no longer subject to the special provisions on jurisdiction allowing policyholders and injured persons to sue an insurer in the court of their own domicile.

This led to a rush by claimants to bring proceedings before the deadline so as to seize jurisdiction in their preferred forum, resulting in an increase in litigation in the first half of 2020.

Those claims issued in England and Wales will now be subject to the common law rules on jurisdiction - which applied previously to defendant's domicile outside of the EU and Lugano Convention states. In that regard, the Supreme Court's 2021 decision in Brownlie has confirmed previous decisions widening the scope of the jurisdictional gateway for tortious claims, in circumstances where a claimant can show that damage has been sustained in the jurisdiction. For personal injury cases, that includes ongoing pain and suffering, treatment, loss of earnings and care provision.

Brussels I recast and Lugano also provided that a judgment in one Member State will be recognised and enforceable in another. Their absence post-Brexit are major issues which remain outstanding and have led to a noticeable decrease in litigation as claimants are wary of bringing proceedings in England and Wales if it means they are potentially left with an empty judgment.

Our top three cross border radar issues for 2022

1. Enforcement

Whether a mechanism will be found to allow for mutual recognition and enforcement of judgments between the UK and the EU is a matter of key concern to litigants. As it stands, a successful party would need to litigate further in a foreign court in respect of both, leading to uncertainty of outcome and increased costs. That affects defendants as well as claimants. For example, a defendant may successfully defeat a claim in England, but that judgment would not automatically be recognised in subsequent proceedings in an EU member state.

We anticipate two potential problems: (1) where the foreign court considers the English court has overstepped in accepting jurisdiction (and this is a real risk with the impact of Brownlie); and (2) in respect of English legal costs, which are commonly many times greater than those seen on the continent.

A possible resolution could be found in accession to the Hague Convention 2019. However, it would be at least 12 to 18 months before coming into force and even then there are potential gaps in the regime compared to the position under Brussels I recast and Lugano.

2. Future Impact of Brownlie

Claims involving personal injury with ongoing symptoms suffered by claimants in England or Wales are likely to meet the 'damage gateway'. In catastrophic injury claims and claims for bereavement it should be relatively straightforward to meet this test. The position in minor/less serious injury claims is less clear-cut as the Brownlie judgment does not set any threshold for the extent of ongoing damage/loss in the jurisdiction. There is a risk this will lead to an increase in litigation in lower value claims with claimants seeking to rely on ongoing care, medication or loss of earnings to establish ongoing 'damage', even if these only last a matter of weeks. Defendants will need to look closely at claims presented and challenge jurisdiction where appropriate, as claimants still have to meet the forum non conveniens test. There is potential here for increased costs with preliminary issue hearings and appeals, as District Judges across the country will be asked to determine jurisdiction challenges, which pre-Brexit were not common place.

The position is even less clear in pure economic loss claims, which will have to be determined on a case by case basis. If, for example, a claim relates to the total loss of a vehicle following an accident in Germany it may be difficult to establish jurisdiction in England. However, if that same claim includes ongoing loss of use or loss of profit and the cost of a replacement vehicle purchased in England, there may be an argument that damage has been sustained within this jurisdiction; the Brownlie judgment may well lead to an increase in litigation in these types of claims.

3. Motor insurance reform

The 2009 Motor Insurance Directive (2009/013/EC) has been reviewed by the European Parliament and the Commission. Key changes were agreed by the institutions at the end of 2021 and will take effect in December 2023. The scope of compulsory insurance will be restricted to type-approved vehicles only and motor sports will be excluded; measures which reduce significantly the wide interpretation of 'use of a vehicle' which stemmed from the Court of Justice's controversial decision in Vnuk v Zararovalnica in 2014. Minimum levels of cover will be increased across the EU to €6.45m per incident for personal injuries (or €1.30m per injured party) and to €1.30m for property damage.

These changes will not, because of our leaving the EU, affect motor insurance law in the UK. That said, the Vnuk decision, and the related case law, are a form of 'retained EU law', meaning they remain in force in the UK unless and until specific national legislation is passed here to amend them. The irony and anomaly here is that while the EU 27 states have now agreed to restrict the "absurd overregulation" of the case law, the UK will not benefit from that. The way forward now appears to rest with a Private Members' Bill rather than in government legislation. At the time of writing, the Motor Vehicles (Compulsory Insurance) Bill had passed early stages in the Commons and is expected to reach the Lords in February or March 2022.

Other changes to the 2009 Directive will allow EU states to exclude low power and low speed vehicles from scope, meaning certain e-scooters and other personal powered transporters would not be subject to compulsory cover. The UK government is committed to reviewing the regulatory framework around e-scooters this year - including insurance arrangements - in light of data which is being collated from the trials of hired e-scooters in over thirty locations. The analysis is due to start in March.

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.