Brexit: is it about to become more difficult to enforce judgments against defendants in the EU?
One of the advantages of being a member of the EU has been our participation in the EU-wide system for the recognition and enforcement of judgments…
One of the advantages of being a member of the EU has been our participation in the EU-wide system for the recognition and enforcement of judgments obtained in any member state. As we prepare for departure from the EU, commercial litigation Partner, Andrew Cromby, asks whether the regime for the enforcement of UK judgments in the EU about to change for the worse…
The current regime for the enforcement of judgments
Regulation (EU) No.1215/2012 (the "Recast Brussels Regulation") provides for the mutual recognition and enforcement of judgments obtained in the courts of the UK throughout the EU. Conversely, it also permits judgments obtained in the courts of EU member states to be enforced in the UK. This has made life significantly easier for those wishing to enforce, say, English judgments in other EU countries. Such judgments can almost automatically be transferred and enforced locally. That comes in handy where, for instance, you have obtained a judgment against your EU trading partner and need to enforce that judgment in their home country.
Part of that process has been the system for obtaining what is known as European Enforcement Orders – essentially a system for registering judgment in the local jurisdiction where they are to be enforced. This has further facilitated the ease of enforcement across the EU.
What will the position be after Brexit?
Unless new legislation is put in place to shore up the position. the current cosy arrangements will cease to apply when the UK leaves the EU. That could see the UK needing to negotiate reciprocal recognition and enforcement arrangements with individual member states or signing up to less comprehensive (and probably less straightforward) conventions for the reciprocal recognition of judgments with some if not all of the remaining EU states.
Prepare for the worst?
Like so much of our current Brexit strategy, how the UK intends to deal with this issue is presently unclear. Apart from simply waiting to see what happens, what practical action can be taken now to guard against future uncertainty? One practical point that businesses might consider is whether it would be sensible to modify their terms of trading to provide for disputes to be dealt with by way of arbitration.
Arbitration is often viewed as a preferable way to deal with cross border commercial disputes. Unlike court proceedings, arbitration is a private process, which can have its advantages. Although the preliminary arbitral process can take longer than court proceedings, the ability of a party to prolong a dispute in the long term, by appealing any decision made, is extremely limited. A number of EU member states have already signed up to one or more of the commonest conventions on the enforcement of international arbitral awards – so enforcing an award is already a path well trodden. As a consequence, providing for any dispute between the parties to be dealt with by way of arbitration could help to minimise the present uncertainty regarding the enforceability of court judgments, post Brexit.
Weightmans continues to monitor developments on this issue.