Impact of Brexit on the litigation rules of the Brussels and Rome EU Regulations
15/03/2019

Introduction

On 29 March 2019, the United Kingdom is supposed to leave the European Union as a consequence of the referendum held in the UK on 23 June 2016.  UK Parliament confirmed the leave decision of the referendum and UK Prime Minister May notified the start of the 2-year exit procedure foreseen in article 50 of the EU Treaty to EU President Tusk by letter of 29 March 2017 [i].

During the past 2 years, representatives of the UK and the EU negotiated a Withdrawal Agreement [ii] that was endorsed by the EU leaders on 25 November 2018, but which was/is still subject to political internal approval by the respective UK and EU Parliaments.

As the deadline approaches with the weight of a modern ‘D-Day’, the necessary approval by the UK Parliament has not been obtained so far (UK Parliament rejected the Withdrawal Agreement twice) and it is currently still unclear what will happen in the next few weeks. A political thriller is taking place in London and in Brussels as great interests are at stake on many levels.

One of many questions of a legal nature that is connected with Brexit is the impact that it will have on the rules of international litigation, the so-called rules of ‘conflict of laws’ or ‘private international law’ that determine amongst others where a legal case must be brought (jurisdiction) and which legal system must be applied (applicable law) in disputes with an international character and involving a UK aspect or person.

In the EU, in civil and commercial matters, currently the rules on international jurisdiction are governed by the Brussels Regulation[iii], while rules on international applicable law are laid down in the Rome Regulations [iv]

This article briefly sets out some of the possible outcomes that Brexit may have regarding these Regulations.


Deal or No Deal, that is the question…

As things stand today, the Brexit decision in itself is already a fact, but it remains uncertain what will be the many consequences of Brexit and their exact timing.

The future of the aforementioned international conflict of laws rules laid down in the Regulations in a EU/UK context, depends on whether the Withdrawal Agreement will or will not be accepted.  Or as it is put in popular terms: whether there will be a Deal or No Deal.

Currently two options remain: if the Withdrawal Agreement would be accepted (Deal), it follows obviously that this legal text should be consulted in order to understand the consequences for the Regulations. If on the other hand the Withdrawal Agreement would not obtain the necessary approvals from the Parliaments (No Deal), the destiny of the Regulations is unclear and answers must be sought elsewhere. In this latter scenario the British Government has prepared some guidelines in a so-called Technical Notice.


Deal: the Withdrawal Agreement

One of many remarkable aspects of Brexit is the following: everybody talks about it, but few people actually know what it is all about.  A simple question you can submit to the majority of people is this: have you actually read even one sentence of the Withdrawal Agreement? Most people have never taken even the slightest look at this document, and probably nobody -apart from the negotiators- has ever read the entire 185 pages of the Withdrawal Agreement. This is a first striking fact about Brexit, which emphasises the contrast between the complexity of the process and the simplicity of rhetoric used by some politicians.

A second striking fact about Brexit is that the decision to leave the EU, which resulted in hundreds of contractual clauses established by expert negotiation teams, was ever submitted to a vote by referendum asking simply if people wanted to ‘remain or leave’ the EU. Submitting such a complex matter to the direct vote of the people may have been democratic in theory, but was not based on a good understanding of the vast consequences as recent history has shown.  The fact that the leader of opposition party Labour, Jeremy Corbyn, has recently opened the possibility that another new referendum may be organized is therefore even more remarkable, as it seems very unlikely that 66 million people could ever really agree on anything at all, let alone a highly complex separation agreement.

That being said, and assuming firstly that there will be a Deal, what does the Withdrawal Agreement foresee in relation to the aforementioned EU Regulations?

First of all, it is important to point out that the Withdrawal Agreement has foreseen a ‘transition period’, which lasts until 31 December 2020 (article 126), but can be extended once by mutual consent. During this transition period, the UK will remain a member of the European Economic Area, the single market and the customs union. Also during the transition period EU laws will continue to apply to the UK (article 127 Withdrawal Agreement). However, the UK will not be represented in the decision-making bodies of the EU. The transition period is thus created to give businesses time to adjust to the new situation, and to negotiate a new trade deal between the EU and the UK.

With regard to matters of applicable law, article 66 of the Withdrawal Agreement provides that the Rome Regulations will apply to contracts concluded and events occurred before the end of the transition period.

With regard to matters of jurisdiction, article 67 of the Withdrawal Agreement provides that the Brussels Regulation shall apply in respect of legal proceedings instituted before the end of the transition period.

In summary, therefore, the Withdrawal Agreement currently foresees in a continued application of the Regulations until at least 31 December 2020.  On a short term the continuity has therefore been guaranteed in the Withdrawal Agreement.

It is not clear what will happen as from 2021, but the intention of the UK Government is -according to the notification letter of PM May- to “convert the body of existing European Union law (the “acquis”) into UK law”. The situation after 2021 is therefore actually unknown and thus no different than a No Deal scenario, so let’s take a closer look at the consequences in case of No Deal.


No Deal: the UK Technical Notice

Article 185 of the Withdrawal Agreement has foreseen that it shall enter into force on 30 March 2019, but then goes on to say that: “In the event that, prior to that date, the depositary of this Agreement has not received the written notification of the completion of the necessary internal procedures by the Union and the United Kingdom, this Agreement shall not enter into force”. It sounds as if the negotiators already feared that there would be No Deal.

It is remarkable that from the side of the EU there has been hardly any communication on the possible consequences of a No Deal scenario, even though it is equally important for many inhabitants of the remaining EU member states what their rights and obligations will be in dealing with the UK.

On the side of the UK however an extensive website is available where many guidelines and technical notices can be found regarding the consequences of No Deal [v].

With respect to the specific aspect of the rules on jurisdiction and applicable law of the Regulations, the English Government has provided some guidance in the ‘Technical Notice on Handling Civil Legal Cases that involve EU Countries if there’s no Brexit Deal’ [vi].

With regard to jurisdiction, the Technical Notice mentions that the Brussels Regulation would be repealed for all parts of the UK and replaced by domestic UK common law and statutory rules and existing international agreements.  The UK would also take steps to re-join the Hague Convention on Choice of Court Agreements of 2005 [vii].

With regard to applicable law however, it is foreseen that all parts of the UK would retain the Rome I and Rome II rules in cross-border disputes.

Even though this clarifies the position of the UK with regard to the Regulations to some extent, it is clear that many questions remain.  With regard to the Hague Convention there remain timing issues as it would only apply to contracts concluded after the entry into force for the state of the chosen court.  With regard to the Rome Regulations, these contain many references to EU law which will in turn require some time to convert into UK law.

Even though the Technical Notice does not refer to them, the question may be asked whether the UK will return to the application of the previous conventions i.e. the 1968 Brussels Convention (jurisdiction) and the 1980 Rome Convention (applicable law).

In any event, all of these solutions seem incomplete and will probably be temporary, awaiting new bilateral agreements or conventions between the UK and the EU in the aftermath of Brexit.


Conclusion

The exit of the UK from the EU will affect millions of people and businesses throughout the UK and the entire EU.  In order to allow an orderly exit, Brexit must continue to be approached as a process rather than an abrupt termination.

Depending on a Deal or No Deal scenario, the consequences may be different for a wide scope of aspects, including the rules of private international law.

If the UK and the EU want to remain custodians of the Rule of Law, they have to arrange that their people and businesses are able to know well in advance which law is to be applied, and which court is competent in case of disputes.


Pieter-Jan Termote

References:

[I] Notification Letter:
http://data.consilium.europa.eu/doc/document/XT-20001-2017-INIT/en/pdf

[II]
Withdrawal Agreement:
https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:12019W/TXT&from=EN

[III]
Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters:

https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2012:351:0001:0032:en:PDF

[IV]
Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I): https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=celex%3A32008R0593
Regulation (EC) No 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations (Rome II): https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32007R0864

[V]
UK No Deal Website:

https://www.gov.uk/government/collections/how-to-prepare-if-the-uk-leaves-the-eu-with-no-deal

[VI]
Technical Notice Civil Cases No Deal:

https://www.gov.uk/government/publications/handling-civil-legal-cases-that-involve-eu-countries-if-theres-no-brexit-deal/handling-civil-legal-cases-that-involve-eu-countries-if-theres-no-brexit-deal

[VII]
Hague Convention on Choice of Court Agreements:

https://www.hcch.net/en/instruments/conventions/full-text/?cid=98

Zie ook : Consiglio Law


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