The implications that leaving the EU could have from a Dispute Resolution perspective
Monday, 20th June 2016
At the moment the UK is governed by EU law, including a network of legislation that applies to many aspects of litigation, such as deciding which Court has jurisdiction in disputes, the reciprocal recognition of judgments with the EU and the service of legal proceedings.
If the UK was to leave the EU, it is unclear whether it would be able to (or would choose to) remain part of these arrangements.
Membership of the EU also provides the opportunity to appeal some English judgments to the European Courts.
Many EU laws have been enshrined in English law via domestic legislation; if there is a Brexit these laws will continue to apply unless they are specifically repealed.
Other EU laws, being EU Regulations, apply directly to the UK without the need for Parliament to pass new law. If there is a Brexit, EU Regulations will no longer apply and it will be for Parliament to decide whether to introduce replacement legislation. Court cases that had applied EU Regulations in their interpretation of English legislation would still be good law, although they might be challenged, leading to a review of the applicable law by the Courts. This could lead to uncertainty, particularly in certain industries that are currently heavily controlled by EU Regulations; uncertainty can lead to disputes.
EU rules determine which courts have jurisdiction in cross-jurisdictional disputes. The general rule is that the defendant should be sued in the court of the member state where it is domiciled. The parties are, however, free to agree that the courts of a particular country are to have jurisdiction (and the rules give effect to that choice) subject to various qualifications.
If there is a Brexit there are a number of options that could be applied, including joining various international associations or reverting to previous arrangements.
Service of proceedings
Providing a Court in England and Wales has jurisdiction to hear a dispute, the Claimant in those proceedings can (subject to certain criteria) serve legal proceedings on the Defendant in any other EU member state without having to apply for the Court's permission, which saves the Claimant both time and costs. The process is not as straight forward as serving legal proceedings within England and Wales; however, it is less onerous than serving proceedings on non-member states. If there is a Brexit the current arrangements will not be available; however it is most likely that new arrangements would be made with the EU, although the details would need to be negotiated.
At present the European Enforcement Order Regulation ("the EEOR") allows (subject to certain criteria) uncontested money judgments made by the Courts of EU countries to be enforced in other EU countries. This greatly simplifies the enforcement of judgments and ultimately saves time and costs.
Alternative options are currently available under the Brussels Regulation (which applies to all members of the EU and Denmark) and the Lugano Convention (which covers Norway, Iceland and Switzerland). Other legislation provides reciprocal arrangements for enforcement in a number of Commonwealth, and other, countries.
If there is a Brexit the EEOR option will fall away unless other arrangements are agreed between the remaining member states; it seems likely that such arrangements will be made.
Ultimate appellate Court
In 2009 the House of Lords was replaced by the Supreme Court as the ultimate domestic court of appeal for civil and criminal matters in England and Wales. At present some disputes can be appealed to the European Court of Human Rights (which deals with cases concerning alleged infringements of the European Convention on Human Rights) and the European Court of Justice (which deals with cases concerning alleged infringements of EU law). If there is a Brexit these options will not be available.
Choosing English law
English law and the English judiciary are respected throughout the world and many contracting parties chose to have their contracts governed by English law and to have the English Courts hear their disputes. Similarly, London is often chosen as the location, or seat, for international arbitration.
It is uncertain whether a Brexit would impact on the attractiveness of English law and the English Courts or as an arbitral seat. Whilst parties outside of Europe may not be deterred, would parties within Europe see England as too complicated a place post-Brexit?