What does Brexit mean for Enforcement of judgments?

• Europe
• United Kingdom

• Brexit
• Competition, EU and Trade - Brexit
• Litigation and dispute management

25-07-2016

This briefing represents Eversheds' view at the time of publication and some of its content is now out of date. We continue to monitor our legal briefings to ensure our content remains up to date. For our latest views on this topic please see our Brexit Hub.

Overview

Enforcement of English and Welsh court judgments in EU Member States (or vice versa) is currently a straightforward procedure under the Recast Brussels Regulation (1215/2012). This provides a cost effective procedure for reciprocal enforcement of judgments in all Member States (except Denmark, which is covered by the 2001 Brussels Regulation (44/2001)).

What will change?

Following the UK’s exit from the EU, and absent any express agreement to the contrary, the Recast Brussels Regulation will cease to apply to the UK. What this means for the enforcement of English and Welsh judgments in the EU and vice versa will depend on the model of exit negotiated by the UK. There are a number of possible options available to the UK which would address the issue of EU-wide cross-border enforcement, including possible accession by the UK in its own right to the Lugano Convention 2007, or the Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters 1971 which provide similar frameworks for reciprocal enforcement between contracting states, including the EU. If no such agreement is entered into, then enforcement of English and Welsh judgments within the EU (and EU judgments in the UK) will be subject to the applicable conflict of law rules in the country in question. This will likely add time and cost to cross-border enforcement.

Should I be worried?

Until the UK actually exits the EU, the current provisions for EU enforcement remain in place. The timing of the UK’s exit will be two years from the date it triggers Article 50, unless sooner agreement is reached – which we think is unlikely. So whilst we do not know what the landscape will look like in at least two years’ time, the short-term prognosis remains unchanged. For parties currently engaged in litigation, this gives a sufficient window of certainty not to become unduly concerned about enforcement issues at the present time.

Eversheds’ expert prediction

Although the shape of the UK’s exit agreement from the EU is little more than speculation at this stage, we think the most likely outcome will be for the UK to seek to accede to the Lugano Convention in its own right. This model allows for a straightforward process for reciprocal enforcement between contracting states which, although less streamlined than under the Recast Brussels Regulation, will provide certainty with regard to enforcement in the EU.

The shape of this strategy will likely become clear well before its implementation date, giving parties involved in litigation plenty of advance warning of any potential change in regime. It is possible that transition arrangements will be put in place for ongoing cases rather than facing an overnight abolition of the current law.

Regardless of what the future holds, the current regime remains in place giving two years or more of certainty. Claimants can take advantage of this to resolve existing cases and commence pending litigation while the position for cross-border enforcement is clear. A heavy focus on ADR and/or taking advantage of the current Shorter and Flexible Trials Pilot Schemes may help to expedite resolution so that enforcement can take place before any change in regime. On the other hand, we expect to see defendants using tactical delay, taking advantage of the approaching expiry of the pre-exit window to increase pressure on their opponents.