Enforcement Outside of the Jurisdiction Post-Brexit

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Posted: 28th May 2021 by
Simon Vumbaca
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With the UK having exited the European Union, practitioners in England and Wales have new considerations to make while pursuing cross-border disputes. Below, Simon Vumbaca explores what has changed.

From 1 January 2021, the rules of jurisdiction set out in the Brussels I Regulation ceased to be applicable. What were the most imposing changes that needed to be prepared for?

I believe this will mean furthering collaboration with specialists in other jurisdictions as we will have lost an acquired certainty for an inevitable uncertainty. The UK has become a third state for the purposes of Brussels I Regulation and as such, we cannot assume the same fluidity and recognition regarding enforcement.

Enforcement out of the jurisdiction will depend on a variety of factors which will need to be considered on a case-by-case basis. The situation will hopefully become clearer through legislation and development as issues arise.

A short-term effect is that practitioners involved in cross-border disputes with a UK/EU element will need to rely on the relevant provisions, treaties and domestic legislation and on the timing of the legal proceedings in question. It will be imperative to add clear jurisdictional clauses, especially in this initial phase and until clear precedents are set. Finally, we need to hope that the Ayala court understanding will be echoed by the EU courts. Early signs to that effect are mixed.

What needs to be shown in order to obtain permission to serve out of the jurisdiction?

The 10,000 feet rule is that documents must be served within the jurisdiction, i.e. England and Wales. There is no absolute right to serve a claim form out of the jurisdiction without the permission of the Court. Again, a clear service clause in an agreement could be of great assistance to avoid costly debates and cost of service.

The ability to serve a claim outside England is based on the fact that the court has jurisdiction to determine the dispute between the parties. Consideration needs to be given to the possible jurisdictional challenges, a good practice in any event. It will not sit well with the client to be turned down at this stage of the proceedings.

In determining the application, the court will need to be satisfied that three requirements have been met: whether there is a serious issue to be tried, whether there is a good arguable case and whether the court is the appropriate forum.

What role does the Hague Convention on Choice of Court Agreements 2005 play here?

A great role indeed! The position of the UK is that the application of the Convention vis-a-vis the UK will continue without interruption. It should be noted that the EU Commission has recently taken a different approach from the UK as to whether the Convention applies to exclusive jurisdiction clauses in favour of the courts of England and Wales that were entered into prior to 31 December 2020.

The Private International Law (Implementation of Agreements) Act 2020 received royal assent on 14 December 2020 and achieves the domestic implementation of the Hague Conventions. Therefore, service using this mechanism is available as it was before Brexit took place, and is of greater importance now as other avenues may no longer be available.

Post-Brexit, enforcing English judgments throughout the EU may be marginally more difficult than it currently is under Brussels Recast. What difficulties may be presented here?

From 1 January 2021 onwards, parties with an English judgment wishing to enforce within the EU will no longer be able to rely on direct recognition and enforcement, which was previously afforded to them under the Recast Brussels Regulation. Therefore, added difficulties arise in determining under which mechanism enforcement will be recognised. Options to be considered include the Hague Convention, bilateral treaties and local laws of the specific EU Member State.

In a nutshell: we will need to have local specialist knowledge in each jurisdiction in which we are attempting enforcement. This may affect times and costs for the clients and will likely also add an element of uncertainty increasing perceived resolution of the matter. Last month we had a valid order to execute in France and the French court requested additional documents to be translated, at great cost to the client, to rule that they needed more time to consider. In the meantime, the French entity we attempted to enforce upon entered administration, putting us in a queue of creditors as the French Court had not yet validated the UK order. Luckily with some persuasion, reason prevailed for the client, but it is certainly a sign of things to come.

In a nutshell: we will need to have local specialist knowledge in each jurisdiction in which we are attempting enforcement.

What factors may ameliorate these difficulties?

Being strategic from the start of the matter and ideally from the contractual phase. Having a good team of Strategic Alliance Partners in the local jurisdiction will certainly be advantageous, saving costs and time for the client. We have focused the development of ASV Law to that effect and early signs that it was the accurate move are already showing. A deeper understanding of the client’s real goal will help in defining where to start proceedings, as sometimes it may be worth bypassing the UK Courts altogether to secure execution if we identify a risk factor, such as administration or weak economic position of the defendant. Winning a case and not being able to execute the order is great for the lawyers (a win is a win) but often pointless to the clients!

 

Simon Vumbaca

ASV Law

Address: 1 Knightsbridge Green, London, SW1X 7QA

Tel: (+44) 020 7993 5450

Email: info@asvlaw.com

Website: www.asvlaw.com

 

ASV Law was established by Simon Vumbaca in 2011 and is an international law firm based in Knightsbridge, London. It delivers corporate, commercial and litigation advice to global clients, bringing parties together to facilitate settlements and mediation.

Simon Vumbaca is an award-winning lawyer with over 25 years of international experience and a reputation for delivering substantial corporate and commercial sector success. Qualified in multiple jurisdictions, Simon offers international clients strategy-led complex cross-border litigation and arbitration advice with great success.

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