Are you signing a contract with an EU party? Does your company already have tied with EU businesses?
Either way, you must consider the implications of Brexit on enforcement of the judgement in cross-border disputes beforehand. After the end of the transition period, the UK-EU cases are not governed by the same rules. The withdrawal agreement remains uncertain on how and in what ways contractual parties will deal with disputes.
Therefore, it will be wise to add an exclusive jurisdiction clause within the contract to mitigate risks. The law you choose can resolve contractual conflicts more smoothly and efficiently.
Here is why this is important:
Understanding the Enforcement of Judgements in Cross-Border Disputes Post-Brexit
The Background
Pre-Brexit, cross-border disputes were judged according to the Brussels I Recast Regulation and Lugano Convention. These laws are not applicable anymore because they require a mutual agreement between both states. Without a governing law, the enforcement of judgements falls under domestic rules. That means the contracting parties can issue proceedings in either the UK or an EU state. They can even file a lawsuit in both jurisdictions simultaneously.
That might cause complications since the UK and EU are no longer obliged to comply with a singular ruling. Contradictory verdicts can cost petitioners a hefty price and lengthy proceedings.
Post-Brexit Alternatives: What Does the UK Plan to Do?
The British government wants to become a member of the Lugano Convention independently. That will mean that cross-border cases can get ruled according to the convention, which would mitigate uncertainties. The only trouble is that the EU government has yet to permit membership.
Nevertheless, the UK does have a membership to The Hague Convention. According to its rules, parallel proceedings cannot occur if the contract grants exclusive jurisdiction agreement to one of the two states.
As a result, contracting parties can weigh the benefits and disadvantages of corporate laws concerning disputes. Then use these details to add an exclusive jurisdiction clause depending on the state that benefits them. For instance, selecting the English common law increases the calibre of judgement for British-based companies. The legal proceedings will be held in a familiar language, and its outcomes are more predictable.
The right attorney can guide you through the process. We can help you select a jurisdiction that is more likely to rule in your favour, if a dispute occurs.
In a Nutshell
At present, we are dealing with a ‘no-deal’ situation regarding all UK-EU cross-border civil disputes that were filed in 2021. Both countries have yet to agree on using the Lugano Convention as the governing law in this scenario. It can be advantageous for contracting parties to choose an exclusive English jurisdiction clause in their agreements. Having this clause from the start can prevent uncertainties surrounding enforcement of judgements and costly delays.
Do you need help? Consult our international corporate lawyers to draft compliant contracts and tackle civil law cases.