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12 January 2021
Disputes Quick Read – 67 of 99 Insights
Disputes Quick Read: Should you still choose the English courts to have jurisdiction in your international contracts after Brexit?
- Quick read
Chances are, you haven't looked at the boilerplate jurisdiction clause in your contracts for some time. There have, however, been important changes to the law post-Brexit – which means you should review this clause to ensure it still does what you want it to.
Here's a quick overview of how the law has changed, and a series of practical points for you to consider when reviewing your existing jurisdiction clause.
What has changed?
Jurisdiction
The UK is no longer part of the Recast Brussels Regulation which regulates jurisdiction and enforcement between EU Member States.
The regime has been replaced (in part) by the Hague Convention on the Choice of Courts Agreements 2005 (HCCCA). The essence of the HCCCA is that it gives effect to an exclusive choice of a court in a contracting state, including all EU states.
So, if you choose the English courts to have exclusive jurisdiction in your contracts, European courts should respect that decision and reject jurisdiction. However, they only have to do so if the clause was concluded after 1 January 2021.
Jurisdiction clauses where the parties to a contract aren't subject to the same jurisdictional choices aren't subject to the HCCCA. If you have these clauses in your contracts, local laws will apply regarding whether a court in an EU member state will accept jurisdiction – and they may not.
Enforcement
Questions of enforcement are also governed (in part) by the HCCCA.
As with jurisdiction, the HCCCA only applies in agreements with exclusive jurisdiction clauses. You can only rely on the HCCCA if you obtain a judgment from a court in a state designated in an exclusive jurisdiction clause.
If the HCCCA applies, enforcing a judgment in an EU state should be relatively quick and straightforward, without requiring a declaration of enforceability.
In all other circumstances, fresh proceedings applying the local rules on the judgment in the forum of enforcement will likely be needed. In most cases, this will be slower and more expensive – and sometimes challenging, even.
What should you do?
If possible (and commercially appropriate), include an express choice of exclusive jurisdiction in your contract to maximise the chances of the HCCCA applying.
If you want to have any dispute heard by the English courts, provide for the appointment by any overseas counterparty of an agent for service in England. This will guarantee that the English courts' jurisdiction can be based on service of a defendant within the jurisdiction.
You should also consider arbitration, as the UK and all EU member states are parties to a 1958 New York Convention. The Convention enables arbitral awards to be enforced in a straightforward way similar to court judgments under the Recast Brussels Regulation.
So, should you still choose the English courts?
Choice of jurisdiction should be based on several commercial and legal factors. In most cases, we think companies won't change their choice of jurisdiction based on these changes alone. The practical steps given above should also mitigate concerns.
Finally, the UK has taken steps to accede to the Lugano Convention. Its accession is subject to the positive response from the EU (and other signatory states). If acceded to, the position post-Brexit will be substantially the same as before – we'll hopefully know for sure in a few weeks or months.
Find out more
To discuss the issues raised in this article in more detail, please reach out to a member of our Disputes & Investigations team. To learn more about how Brexit could impact your business's digital services, register for our upcoming webinar.
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