Brexit and European legal transactions – Keep calm and carry on


Author: Alexander Wildschütz


On 23 June 2016, voters in the United Kingdom opted to leave the European Union. Although a referendum is not constitutionally binding, the Prime Minister has announced that he will respect the result and clear the way to withdrawal from the EU treaties under Article 50 of the Lisbon Treaty.

In contrast to what was originally planned however, the Article 50 procedure will not be triggered immediately. Although this postponement has encountered resistance on the part of the EU Commission, the present state of affairs is that the British Government is not planning immediate steps to implement the referendum.

It is impossible to tell at present what political and economic consequences these developments will have in the long term. But it is clear that the government of the United Kingdom will endeavour to implement the upcoming changes in a considered and coordinated manner, wherever this path may lead.

Until the ensuing exit negotiations have been completed, the current status quo in the relations between the United Kingdom, the EU and its institutions and in relation to the individual EU Member States remains unaffected. In the meantime, the EU treaties remain in force and EU law remains binding for the United Kingdom without restrictions.

The outcome of the referendum does not affect court proceedings currently pending in the United Kingdom. The same applies to the currently applicable rules for the recognition and enforcement of judgments from other European countries that are given before completion of the undoubtedly long process of negotiations on the exit conditions and their implementation into national law. Neither will the rules for the recognition and enforcement of civil decisions of the courts of the United Kingdom in other European countries be affected.

Moreover, it is not anticipated that, even after the exit process has been completed, cross-border civil and commercial disputes will be subject to significant changes.  The basis for the recognition and enforcement of court judgments from other European countries was laid down by the Brussels Convention on jurisdiction and recognition and enforcement in civil and commercial matters of 1968, long before the accession of the United Kingdom to the Treaty of Rome. The existing EU regulations on cross-border civil disputes, such as the Brussels I Regulation, are based on these principles which have been established for more than 40 years. The concept of cross-border civil justice is also not limited to EU territory and not dependent on membership of the EU. The parallel provisions which apply independent of EU membership deal specifically with the division of competence of the national courts in international cases and the enforcement of judgments abroad.

The same applies to the rules which govern which country’s substantive laws apply in a civil or commercial dispute. Although these rules have been implemented in the EU context in detailed EU regulations, they are, after all, based on much older and established principles of private international law that apply beyond EU borders and independently of membership.

English civil law and the English court system are of very considerable economic value for the whole of the United Kingdom, and especially for the London region. The integration of the English law system into the world economy and the reliable and consistent mobility of court judgments in both directions are also the basis for the importance of London as a location for the financial sector and the services market intertwined with that sector.

It is therefore assumed that the future position of the United Kingdom in the field of cross-border civil justice will not significantly differ from the current regime. Although the name of the relevant legislation will change and the simplified and speedy procedures for enforcement of foreign judgments introduced by the recent amendments to the Brussels I Regulation may not be adopted in full, the impact of the termination of the United Kingdom’s membership of the EU should remain without significant consequences.

We would be pleased to answer any questions you may have.

Alexander Wildschütz, Partner, Fladgate LLP (awildschutz@fladgate.com)

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