We're out

The United Kingdom has spoken and has opted to exit the European Union. The fall out from the UK exit is likely to occupy a considerable amount of…

The United Kingdom has spoken and has opted to exit the European Union. The fall out from the UK exit is likely to occupy a considerable amount of parliamentary and legislative time. The immediate consequence of the “leave” vote is the start of a two-year negotiation with the EU over the terms of the UK exit, under Article 50 of the Treaty of Lisbon. This is triggered when the European Council is notified. Failure to agree the terms on which the UK will leave the EU at the end of two years could see the EU impose such terms on the UK. The legislative and civil service time that will be expended on extricating the UK from the EU is likely to take precedence at the expense of several areas of personal injury litigation reform where consultations have been in abeyance pending the referendum.

The consultations that had been expected can be summarised as follows:

  • The small claims track limit
    Within the Autumn statement of 2015, proposals were announced to increase the financial limit for allocation of personal injury cases to the small claims track from £1,000 to £5,000. It was unclear whether the proposal related to all types of personal injury or just whiplash claims.

  • The removal of compensation for minor whiplash claims
    Alongside the announcement in relation to the small claims track increase was the proposal to remove the right to cash compensation for minor whiplash injuries. Any such change is likely to require primary legislation. Given the legislative work that will now be required to extricate the UK and deal with any legislative gaps, there is unlikely to be enough parliamentary time in the short term to consider this proposal.

  • Fixed fees in clinical negligence claims
    At the beginning of the year, fixed costs in clinical negligence claims with damages under £250,000 were due to be in place by October 2016. The consultation did not occur as expected and it is unclear whether the Department of Health has the civil service resources to consider this issue, alongside the impact of the Brexit vote on the NHS.

  • Extension of fixed fees
    Jackson LJ has proposed the extension of fixed costs horizontally to other types of claim where damages are under £25,000 aside from RTA, EL and PL claims. He has also proposed extending fixed costs vertically, advocating fixing costs where damages are up to £250,000 and removing them from the requirement to cost budget. It remains to be seen whether the appetite for this type of reform exists in the coming months.

The position in relation to Solvency II remains uncertain. Solvency II created a harmonised system of market regulation. It was aimed at increasing consumer protection by demanding a minimum level of capital retention by insurers to ensure that they can meet their liabilities in the event of a market crash. Whilst Solvency II is becoming embedded within the UK financial regulatory framework, as with other pieces of legislation that have emanated from the EU it would be up to Parliament to consider whether the capital requirements of Solvency II (which some have cautioned as being onerous) are likely to stay.

For any comments or further information please email brexit.group@weightmans.com.

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