Commercial Dispute Resolution
The implications of Brexit on the resolution of commercial disputes are likely to be restricted to cross-jurisdictional contracts and disputes, rather than domestic matters. Until the terms of the UK’s exit from the EU have been determined, the legal implications for the resolution of cross jurisdictional disputes are unclear. However, it is likely that the following areas will be impacted.
Enforcement of Judgments
The Recast Brussels Regulation sets out a simplified mechanism for the mutual recognition and enforcement of judgments across EU member states. This simplified procedure will not apply when the UK leaves the EU. The enforceability of an English judgment within the EU will depend on the law of each member state. This could give rise to significant uncertainty.
As the law currently stands, there is generally no need to obtain permission to serve proceedings in another EU member state. When the UK leaves the EU, it is likely that permission will be required. In relation to contractual disputes, the need to serve outside of the jurisdiction and/or to seek permission can be avoided by including an English jurisdiction clause and a clause appointing an agent for service.
Alternative Dispute Resolution (“ADR”)
ADR is a means of resolving disputes without having to resort to legal proceedings. This could become much more attractive in circumstances where enforcement of judgments and service of legal proceedings is a concern. Parties may also look to ADR as a means of expediting the resolution of existing disputes to take advantage of the current position on enforcement and service.
The English and EU courts are still likely to respect provisions in a contract that confer jurisdiction by agreement on the English courts. As such, it is important that parties negotiating contracts include an express clause on jurisdiction. However, going forward, uncertainties over enforcement and service could discourage parties from choosing England as a forum to resolve disputes.
Delaying Tactics (parallel proceedings)
There is often a risk of proceedings concerning the same subject matter being commenced in more than one country i.e. parallel proceedings. As matters presently stand, there are EU laws that seek to prevent this. However, once the UK leaves the EU, a party could deliberately seek to issue parallel proceedings in a country where the process is known to be slow and complicated. This delays litigation by tying the dispute up in a lengthy jurisdictional battle.
Terminating Existing Contracts
Parties may attempt to formulate complex and creative legal arguments to terminate existing contracts based on change of law claims; force majeure clauses; frustration; or material adverse change. These types of arguments could give rise to a number of challenging points of interpretation.
Parties negotiating contacts now can plan ahead in the event that a dispute arises e.g. appoint an agent for service, have a Brexit clause and consider potential enforcement issues. However, the position is different for litigation that is contemplated or in progress. It could be appropriate for those parties to secure a settlement or judgment now before the UK leaves the EU.
For more information on Brexit and how it will affect Commercial Dispute Resolution please contact us at firstname.lastname@example.org or call us on 0161 926 9969.