Litigation – Top 5 Issues (Jan 2022)
See also our Cross Broder Disputes Navigator 2022
- Choice of law clauses - The Rome I and Rome II Regulations have been retained by the UK under its domestic laws. Subject to exceptions, such as the application of certain mandatory rules:
• choice of law clauses should continue to be upheld by the UK courts
• choice of law clauses designating English law should continue to be upheld by EU Member States courts.
There is, however, potential for the rules in the UK and EU to diverge over time as UK is no longer bound (i) by decisions of the ECJ or (ii) to follow any EU amendments to the Rome Regulations.
- Choice of jurisdiction clauses - Brussels I Recast harmonises rules on enforceability of choice of jurisdiction clauses. As Brussels I Recast no longer applies to the UK, except where the proceedings were instituted before 31 December 2020, EU and UK Courts could simultaneously assert jurisdiction. Although the UK has joined the Hague Convention on Choice of Court Agreements (Hague), an international convention, it is not without its limitations:
• Hague only applies where parties have chosen exclusive jurisdiction clauses
• It is unclear whether Hague will apply to exclusive choice of jurisdiction clauses between the date that it originally applied to the UK by virtue of its EU membership (1 October 2015) and the date that it enters into force in the UK as a party in its own right (1 January 2021) (known as the "change of status risk").
- Mutual recognition of judgments - Brussels I Recast no longer applies between the UK and the EU, save for proceedings instituted before 31 December 2020. Further, the UK's application to re-join the Lugano Convention was blocked by the European Commission in June 2021. Therefore, unless Hague applies, the recognition of judgments between Ireland and the UK will involve the application of more cumbersome common law rules.
- Parallel litigation and conflicting judgments – Brussels I Recast, Lugano and Hague reduce the risk of parallel litigation because they regulate what happens in such scenarios. In their absence, common law rules of forum non conveniens apply. As the UK is no longer party to Brussels I Recast which coordinates jurisdiction between EU Member States there is a risk of parallel litigation and conflicting judgments in litigation with an EU/UK dimension. The Lugano Convention does not eliminate the risk of parallel litigation (known by many as the "Italian Torpedo") even where there is an exclusive jurisdiction clause, because under Lugano, any court, other than the court first seised, must stay its proceedings until such time as the jurisdiction of the court first seised is established.
- Protective measures – As the UK is no longer party to Brussels I Recast, and until its accession to Lugano is accepted, it will be more difficult to invoke provisional protective measures in support of litigation with an EU/UK element (e.g. urgent cross-border injunctions or asset freezing). Interim protective measures are excluded from Hague.
Summary: The position on choice of law clauses remains as it was before Brexit. The position on exclusive choice of jurisdiction clauses has been advanced with the UK's accession to Hague. However, where the UK's accession to the Lugano Convention remains unratified, uncertainty exists around the enforceability of choice of jurisdiction clauses, and the recognition and enforcement of judgments between Ireland/ the EU and the UK.