No deal UK reverts to national law, lawyers told

The Law Society of England and Wales has issued solicitors’ guidelines on commercial co-operation in the event of a no-deal Brexit.

It highlights the impending changes if Britain crashes out of the EU without a negotiated withdrawal agreement governing their future relationship.

Prepare

Solicitors are being warned to prepare their practices for such an eventuality.

The paper clarifies that national law rules would apply to law in the UK and in EU Member States, as all reciprocal elements of EU law would cease to have effect and would be repealed by the UK Government.

Some bilateral treaties and conventions pre-dating EU membership might exist, but solicitors might need to consult the national law of the state concerned and contact a local lawyer in that country.

Where the parties had an exclusive choice-of-court agreement, the UK would accede to the 2005 Hague Convention.

In relation to the service of documents and taking of evidence, the Hague Convention would continue to apply.

In the event of a no-deal Brexit, EU rules governing the enforceability of UK judgments in the EU would cease to have effect after the withdrawal date.

The UK has indicated that it will continue to enforce judgments given in other EU states where the proceedings were initiated before withdrawal day.

Solicitors should also be aware of the following points:

Common law rules

The Brussels I Regulation would no longer apply between the UK and EU27. It is likely that England and Wales would fall back on pre-existing common law rules for the recognition and enforcement of foreign judgments.

Judgments from EU Member States would be treated in the same way as those coming from third countries where no agreement was in place on the recognition and enforcement of judgments.

The British Government has signalled its intention to adopt the 2005 Hague Convention on choice-of-court agreements in the event of a no-deal Brexit.

This applies in all EU countries, except Denmark, and some non-EU states (such as Singapore and Mexico).

This convention, unlike the Brussels regime, provides only for the recognition and enforcement of judgments where the parties have concluded an exclusive choice-of-court agreement.

Asymmetric clauses

Many banking contracts contain asymmetric clauses and are not covered under the 2005 convention.

The national law of each EU state would determine whether a foreign UK judgment could be enforced in that jurisdiction.

Some EU Member States do not have rules allowing for the recognition of judgments from non-EU states.

The Insolvency Regulation would no longer be applicable between the UK and the EU27 Member States. An insolvency office-holder appointed in the UK would have difficulty obtaining recognition in the EU.

The only member states that have implemented the UNCITRAL Model Law on Cross-border Insolvency are Greece, Poland, Romania and Slovenia.

Other EU regulations concerning special instruments, such as the Motor Insurance Directive would no longer apply.

Motor accidents

This directive means that victims of motor accidents in another EU country could sue insurers in their home courts if the claim were disputed.

EU rules protecting the weaker party, for example victims of motor accidents, would no longer apply in the UK.

The Lugano Convention, adopted in 1988, provides a framework for the recognition and enforcement of judgments between EU and EFTA states (and Switzerland).

It does not give access to the EU instruments, and is a stand-alone agreement.

The Law Society of England and Wales points out that the UK Government has stated that it would aim to re-join the Lugano Convention post-Brexit.

However, the Lugano Convention is an agreement between EFTA and EU states, and the UK cannot simply accede to Lugano unilaterally and immediately after leaving the EU, the Law Society has said.