On 23 June 2016, the people of the UK voted to leave the European Union (EU). The withdrawal of the UK from the EU is a process which is likely to take a number of years. Until details of the UK’s exit have been hammered out, the legal implications for dealing with cross border disputes in the UK remain unclear.
As a member state of the EU, the UK has adopted various EU legislation which sets out the rules that the courts in EU member states have to apply when determining any claim in contract or in tort. The UK’s exit from the EU will have an impact on various aspects of dispute resolution, including:
- Jurisdiction – the EU rules used to determine jurisdiction of courts in member states create a unified approach to the validity and effect of jurisdiction agreements and to the question of which court will have jurisdiction in the absence of a jurisdiction agreement between the parties. Once the UK leaves the EU if no replacement agreement is reached between the UK and the EU then there will be uncertainty as to which court has jurisdiction. To reduce any uncertainty it is important that the parties negotiating contracts ensure that they include clear jurisdiction clauses in those contracts.
- Governing Law – currently, a UK court dealing with proceedings will apply EU legislation when determining which law applies to a contract in the absence of a “governing law” agreement between the parties. When the UK leaves the EU this legislation will no longer apply. Replacement legislation will therefore need to be put into place by the government. To avoid uncertainty it would be wise for parties negotiating contracts to include clear “governing law” clauses in those contracts.
- Service of English proceedings in the EU – as the law currently stands, there is generally no need to obtain permission from an English court to serve proceedings on a Defendant domiciled in another EU member state. However, once the UK leaves the EU, unless arrangements are put in place to continue with this framework then Claimants wishing to serve English proceedings in the EU will need to apply for permission to do so.
- Enforcement of judgments in the EU – EU regulations set out a simplified mechanism for the recognition and enforcement of judgments across EU member states. This mechanism will no longer apply when the UK leaves the EU unless a similar system is negotiated between the UK and the EU.
As with many areas of UK life, the decision to exit the EU will have far reaching consequences for UK law.