How will British Exporters effectively manage their cross-border litigation post Brexit?
After several years of loose speculation by either misinformed, or over optimistic, legal professionals in respect of what the EU judicial landscape post-Brexit will look like, reality is now setting in.
At the start of 2021, and despite applying for accession to the Lugano Convention 2007 back in April 2020, the UK’s application has not progressed and as from the start of this year, any new court proceedings issued will not automatically be enforceable in EU Member States. This no man’s land will remain until the first day of the third month after the UK signs the Lugano Convention.
Thankfully, Brexit does not have a retroactive effect. Very few such changes do. So, this means that any action started before 31 December 2020 will continue to be handled as if the UK was still in the EU. Reciprocally, this also applies to all EU Member States seeking enforcement of Court Judgments or other enforceable Authentic Instruments in the UK.
More specifically and for reference, you can look at article 67 (and 69) and regulation 92 of The Civil Jurisdiction and Judgments (Amendment) (EU Exit) Regulations 2019 (SI 2019/479), which came into force at the end of the Brexit transition period, 11-00pm on 31 December 2020.
Third country status
The UK becoming a third country (= country not member of the EU) is very inconvenient to say the least. Exporters, when faced with deciding whether to start a new court action in 2021, will have to carefully consider and review their options. It is anticipated, especially now that a Brexit deal has been agreed, that the other signatories of the Lugano Convention will allow the UK to join. How long this will take is anyone’s guess and, in the meantime, uncertainty could make it difficult for exporters to decide whether to hold off on any new court proceedings, which would impact their cashflow and reduce their chances of recovery, or find an alternative way of obtaining a more versatile judgment, still capable of crossing EU Borders.
I have, in the past, come across many clients’ terms & conditions (T&Cs) and in my view, the most versatile and interesting ones are those which give options, especially when it comes to jurisdiction. I would never aspire to advise our clients about their T&Cs, but being an exporter myself, I have just asked our lawyer to review and improve ours. In the current context it is now urgent to immediately review T&Cs, especially the jurisdiction clause, and get your clients to sign/agree to them as soon as possible.
If you did not know, on 1 March 2018, the International Chamber of the Paris Commercial Court opened its doors to Cross-Border litigation. Composed of 10 Judges, all fluent English speakers, this hybrid court has been offering an attractive jurisdictional system and it is clearly aiming at taking the UK’s place at the centre of cross-border litigation (both EU and non-EU). So long as one of the parties (at least) to the proceedings is non-French, the case can be tried in this International Court.
Although court proceedings need to be drafted in French, submissions can be made in English and documents supplied in English without any need for translations. This is a predominantly oral procedure and parties, experts, witnesses and legal representatives can express themselves in English.
The judgement issued by the International Chamber of the Paris Commercial Court is drafted in French but supplied with a sworn translation in English provided by the Court Registry.
Another attraction is the cost of using this court. The €250 court fee payable by each party will take care of the entire procedure, from beginning to end.
Note that in a French Commercial Court, judges are not lawyers but they will have practised in your industry at a very high level. So, if you are in publishing for example, a past CEO of Groupe Hachette, France’s largest publishing company, may decide your case.
Finally, exporters also have the option to rely on the rules of the Hague Convention 2005 on Choice of Court Agreements, which the UK remains a part of as it is a party to the Convention in its own right. If your client agreements point to an exclusive jurisdiction (e.g. England and Wales) the recognition and enforcement of foreign judgments in cross-border disputes with EU Member States (+ China, Mexico, Montenegro, North Macedonia, Singapore, Ukraine and the United States) remains possible post-Brexit.
Adapted from an article by Pierre Haincourt MCICM of Credit Limits International in Jan/Feb 2021 issue of Credit Management