Brexit: the impact on UK and cross-European disputes
It is important to remember that nothing will change overnight and that the negotiations with our European neighbours will take place over at least the next two years. That being said, the change is now coming and we have set out below some areas that businesses will need to be aware of following the Brexit vote.
The UK’s membership of the EU means that over the past 40 years, numerous statutory provisions have become a part of our statutory framework without actually being implemented by virtue of any UK legislation. These laws simply apply directly from the EU and will be automatically revoked unless the UK chooses to replace them with the same or similar domestic law. The UK government will have to decide whether to take this opportunity to use its newly re-gained sovereignty to change the rules or simply incorporate the substance of the existing EU law. Either way, SMEs should be prepared for a period of uncertainty while the government chooses to plug the gaps left by EU legislation in areas such as health and safety, data protection and privacy.
Jurisdiction of disputes
Currently a person or business in England or Wales which is party to an agreement with an EU party may have certain rights to be sued in England, and certain obligations to sue the EU party in that party’s home courts depending on the circumstances of the dispute. This will no longer be the case after Brexit, unless the UK and EU agree otherwise, or the UK is able to continue to participate in the existing pan-European conventions on jurisdiction and choice of courts agreements.
Enforcement of judgments
As it stands, judgments of all EU member states can be enforced through the courts of another member state without having to start again by commencing new claims in that country. This is known as ‘passporting’ judgments and saves time and cost for parties who have cross-European disputes. Once the UK leaves the EU, cross-border enforcement in other EU states will no longer be an automatic right and the process for enforcement will be uncertain. In reality, our European neighbours would want to be able to enforce their judgments in the UK just as much as we would want to continue enforcing ours in the EU so it is likely that, after some negotiation, similar arrangements will be put in place. In the short term however, UK judgments could be less effective against opponents in the EU.
Economic and political uncertainty is a prime time for disputes to arise, whether or not your company trades with or relies upon EU imports or custom. To some extent, the Brexit vote will change the UK’s future and, while that new landscape is negotiated and defined, uncertainty is likely to breed disputes while businesses look to protect their interests by getting out of contracts that no longer seem attractive or wish to restrict their spending commitments. Even smaller businesses that don’t trade with pan-European countries or import/export may be affected if someone in their supply chain does.