Brexit: what next for the enforcement of judgments?

Brexit: the seemingly all permeating portmanteau that, love it or hate it, filled the national consciousness for the past four years, finally came to pass at the end of January. With much fanfare, but no earth-shattering physical changes (at least not yet) the UK left the European Union and the focus changed to what the longer sighted always saw as the real battleground: trade, and how to mitigate the impact for businesses and individuals.

There will now be many circles to square before the current transition period closes at the end of this year. One of them is the much debated and trumpeted “taking back our laws”, but how will Brexit change our legal system? The short answer is that it will; the changes have started and will likely continue. The longer answer reveals areas of concern and reasons to preserve at least some of the EU status quo.

Warning signs

Lord Pannick QC, one of the UK’s most highly regarded advocates (and synonymous with the Supreme Court Article 50 case and subsequent challenge to Boris Johnson’s unlawful prorogation of Parliament) issued a stark reality check a few weeks before exit day. His review of the (then) EU (Withdrawal Agreement) Bill opined that the government was attempting to seize control of a “fundamental aspect” of the English legal system by giving ministers the power to tell lower courts to ignore established European case law.

The path to that conclusion is worth noting.

Prior to Boris Johnson’s amendments to the Bill, Lord Pannick was part of a House of Lords select committee which, in 2017, reported on the challenges of repealing primary European legislation and emphasised the necessity for a mechanism to transition directly effective EU law into UK legislation. In 2019, the committee reiterated its very clear concerns about the constitutional issues and practicalities of retaining the status of European law in the English courts.

How will Brexit impact our independent legal system?

As European Commission President, Ursula von der Leyen stated in January 2020, “with every choice comes a consequence”. With the clock ticking until the end of the transition period, it remains to be seen whether the consequences of decisions for our legal system that will come to be realised before then will override the political machinations that will play out at the same time and lead to calls for an extension. Many will dread the “e” word after 2019’s high drama and stalemate, but fear is no justification for jeopardising our system and damaging the worldwide regard in which it is held, particularly in the international commercial arena. Michael Gove has confirmed that there will be “inevitable” border checks, and the last thing a business needs while it is adjusting to new customs rules is a more complex legal system if it needs to enforce rights against an EU counterparty.

Up to 31 December 2020, the European legislative framework and EU rules will remain applicable, with the predictability that delivers. The position after that is less clear.

Despite Lord Pannick’s concerns, section 26 of the European Union (Withdrawal Agreement) Act 2020 gives ministers power to determine, after consultation, which courts will no longer be bound by retained EU case law. The uncertainty around how that power might be exercised is concerning, particularly if the transition period is going to look like the government playing the EU off against the US for trade terms.

Could Brexit mean that decisions are reversed?

The Act will not reverse CJEU decisions. They remain good law, but in a system based on precedent (and historically free from government interference), the apparent ability to “pick and choose” under section 26 makes many feel uncomfortable. It introduces unwelcome uncertainty in areas like competition law, environmental protection, consumer law and workers’ rights that have benefited from EU standards over the years, and which it now seems could, potentially, be ignored if that suited a political purpose.

What are the implications of Brexit on the enforcement of judgments?

If a claimant commences proceedings against an EU based opponent in England, or any of the EU’s remaining 27 member states before 31 December 2020, the current (EU based) rules for determining jurisdiction and enforcing a judgment will apply. Any English judgment can be enforced in a member state and vice versa with relative ease and without additional procedural hurdles.

The position for proceedings commenced on or after 1 January 2021 is less straightforward. In contractual cases, it will depend on whether the agreement contains an exclusive jurisdiction clause and when it was entered into. Having worked that out, the permutations start to unfold, and could leave a party having to seek advice and pursue options under a member state’s domestic rules, all of which add to the time, complexity, cost and risk of pursing a case, factors that are simply not there at the moment.

Brexit will also have significant implications for enforcement and is likely to make affected judgments harder to collect.

What next?

It would be naïve to think that Brexit could have no, or even a minimal, impact on our legal system. The CJEU’s powers were a key driver for many “leavers”, and whilst alarming to lawyers used to courts curtailing over enthusiastic executives, section 26 is perhaps not a surprise. However, it must be used responsibly. Threats to deploy it should not be used to try and gain short term negotiating or political capital. Our legal system is too valuable to tarnish with any impression that politicians can break precedent on a whim.

Business needs as much certainty as it can get in turbulent times. Anything which diminishes that must be a bad thing and it would be prudent to replicate the current, simpler, regime for determining jurisdiction and enforcing judgments in the EU.

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