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10th November, 2020

How leaving the EU will impact court proceedings

brexit flag with star missing

The reality of leaving the EU has created a mass of complications that were not considered during the overly simplified debate leading up to the Referendum.

How leaving the EU would impact Court proceedings between those based in England and Wales (not the UK for present purposes because Scotland and Northern Ireland have their own separate legal systems) and the EU respectively is one of those areas of detail.

The issues of governing law and jurisdiction between the EU Member States are governed by a set of well-understood principles.  The two Rome Conventions deal with governing law in relation to contractual and non-contractual claims respectively and the Recast Brussels Regulations deal with jurisdiction.

In simple terms, Rome I, dealing with contractual claims, provides that the governing law will be that most closely connected with the contract (but subject to a variety of specific rules about particular types of contracts, for instance, contracts for the sale of goods are governed by the law of the country where the supplier is based).

Rome II, dealing with non-contractual claims, provides that a dispute to which it applies will be governed by the law of the country where the damage occurs.

As far as jurisdiction is concerned, the Recast Brussels Regulation’s guiding principle is that defendants should be sued in the country in which they are based, although there are exceptions.

Both the Rome Conventions and the Brussels Regulation are subject, except for certain specific cases where proceedings have to be brought in a particular country such as those relating to the constitution of a company or relating to land, to the agreement of the parties as to governing law and jurisdiction and in practical terms the best advice that can be offered at this time of uncertainty is not to leave things to chance and to provide in your contracts what the governing law will be and which Courts will have jurisdiction.

So, what will the position be post-Brexit?  At the moment the UK transitional provisions continue to maintain the status quo in terms of the application of EU law to the issues of jurisdiction and governing law.  That changes on 1 January 2021.  At that point governing law will remain subject to the provisions of the Rome Conventions pursuant to legislation that has already been introduced in the UK.  However, the position as regards jurisdiction will be different.

The UK has applied to accede to the Lugano Convention, and if that happens the approach to issues of jurisdiction will largely remain as it is now.  If that does not happen, and the current EU stance is that it opposes the UK’s accession, then what the position will be is somewhat unclear.

The ultimate default position is that the English and Welsh Courts will apply Common Law principles to the question of jurisdiction in disputes involving parties from the EU Member States in the same way as currently occurs in relation to disputes involving parties from outside the EU (and where the position is not governed by any other convention or enforceable choice of law and jurisdiction clauses).

These rules largely revolve around whether the defendant is physically present in England and Wales, has an agent here or has submitted to the jurisdiction.  These issues focus on service and even if the defendant is not in England or Wales it is possible to apply to Court to serve them outside the jurisdiction.  That is a whole separate topic in itself. Challenges to prevent proceedings here continuing are possible on the basis that England and Wales is not the appropriate jurisdiction, however.

This is a messy area and a clearer picture may appear as negotiations continue with the EU but for now, there is no substitute for taking advice on any specific situation that you face involving governing law and jurisdiction.

Nick Clarke

Dispute Resolution and Insolvency

Senior Partner and Head of Dispute Resolution and Insolvency
Email: [email protected]
Tel: 01244 405 558



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