On 11 December 2020, EAPIL hosted its first (virtual) seminar, under the title “Brexit and Private International Law – What Now?” Some of the speakers decided to share their initial statements. The statements of Alexander Layton and Pietro Franzina can be found here and here, respectively. Michiel Poesen’s is reproduced below.
Brexit Bites: UK Choice of Court after the Transition Period
This presentation will outline the fate of choice of court agreements in favour of the UK civil and commercial courts after the Brexit transition period, which ends on 31 December 2020. It will entertain whether the courts of the EU Member States will continue to defer to the UK courts as of 1 January 2021, as they had been doing under the Brussels Ia Regulation, and whether UK judgments will continue to be enforced in the EU. Besides its apparent technical import, this topic touches upon the attractiveness of the UK forum and the English forum in particular. Studies (such as this one conducted by BIICL) demonstrated that the English courts are a popular forum for international litigation. Part of the attractiveness is the enforceability of English judgments, which is ensured in the EU by the Brussels Ia Regulation. The English forum’s leading position in transnational litigation will be contingent, at least in part, on the continued respect for English choice of court agreements and the enforceability of English judgments in the EU after the transition period.
Choice of Court in Proceedings Started Before the End of the Transition Period
If proceedings were started in the UK courts before the end of the transition period, Art 67(1) of the 2020 EU-UK Withdrawal Agreement settles matters. The courts of the UK will continue to have jurisdiction under Art 25 of the Brussels Ia Regulation. Importantly, the lis pendens provision of Art 31(2)–(3) will also apply if concurrent proceedings in the EU are started after the transition period, while proceedings were already pending in the chosen UK court prior to the end of the transition period. Judgments handed down by the UK courts in proceedings instituted before the end of the transition period will continue to be enforceable in the EU under Chapter III of the Brussels Ia Regulation.
Choice of Court in Proceedings Started after the Transition Period
Unfortunately, the fate of UK choice of court becomes blurry when proceedings are instituted after the transition period. While UK choice of court is expected to remain effective in the EU given the broad recognition party autonomy enjoys in private international law, the legal regime under which it will is less clear. The uncertainty is to do with the 2005 Hague Choice of Court Convention (“the Hague Convention”). Previously, the UK was a party to the Hague Convention qualitate qua EU Member State; the EU acceded to the Hague Convention on behalf of its Member States on 1 October 2015. Due to Brexit, the UK Government has deposited its instrument of accession to ensure that the UK accedes to the Hague Convention in its own right when the transition period ends. It therefore stands no doubt that the UK will accede to the Hague Convention on 1 January 2021. In principle, this should mean that European courts will defer to UK choice of court under Arts 5–6 of the Hague Convention. This is true insofar as proceedings are started after the transition period (otherwise Brussels Ia would apply) and insofar as the choice of court was made after the Hague Convention entered into force in the UK (Art 16 of the Convention). In this latter condition lies the rub. The UK Government’s position is that the Hague Convention has been in force in the UK uninterruptedly following accession by the EU in 2015:
“[The] United Kingdom considers that the 2005 Hague Convention entered into force for the United Kingdom on 1 October 2015 and that the United Kingdom is a Contracting State without interruption from that date.” (Note verbale accompanying the UK’s Declarations concerning the Convention)
However, the European commission has taken the view that the Convention will only apply to UK choice of court agreements made after the transition period:
“The Convention will apply between the EU and the United Kingdom to exclusive choice of court agreements concluded after the Convention enters into force in the United Kingdom as party in its own right to the Convention.” (Notice to stakeholders of 27 August 2020)
Accordingly, the European commission considers that the Hague Convention was not in force in the UK in the period between October 2015 and the end of the transition period, during which the UK was a party qualitate qua EU Member State. Ultimately, the CJEU will decide whether this position holds sway should the issue arise in the court of an EU Member State. Discussions at online conferences over the last few months (including the EAPIL Brexit Seminar) seem to favour the UK’s point of view.
Even if the European commission’s scenario were followed, the courts of the EU Member States would have a few tricks up their sleeve to give effect to a UK choice of court. Firstly, they might rely on the “reflexive effect” of Art 25 Brussels Ia. According to this doctrine, Art 25 puts an obligation on the courts of the EU Member States to defer to the chosen courts of a third country (G Van Calster, European Private International Law (Hart Publishing 2016) 115). Secondly, continental European courts might rely on Art 33 Brussels Ia (in accordance with the conditions laid down in this provision) to stay European proceedings pending proceedings first instituted in England (M Ahmed, The Nature and Enforcement of Choice of Court Agreements: A Comparative Study (Hart Publishing 2017) 258–259). Thirdly, continental European courts might use their domestic rules to decline jurisdiction or stay proceedings in favour of the chosen UK court, insofar as those rules do not provide that the court first seized has priority over the chosen court. Finally, it should be noted that English courts in particular have a remedy of their own to uphold English choice of court; they can issue anti-suit injunctions. Failure to comply will be considered a contempt of court.
The Hague Choice of Court Convention as a Replacement for Brussels
On a final note, the Hague Convention would be an imperfect replacement for the Brussels Ia Regulation. For its scope of applicability is defined more narrowly. To illustrate, it does not cover non-exclusive choice of court agreement (Arts 2(1)–3), which are commonly used by parties who operate on the financial markets (in contrast to e.g. the 2019 Hague Judgments Convention, which covers the enforcement of judgments originating from a court that was not exclusively chosen by the parties; Art 5(1)(m)). It also excludes contracts for the carriage of goods (i.a. maritime transport, where a choice for the London courts is common). These carve-outs chip away at the capability of the Hague Convention to ensure that UK choice of court will remain as effective as it was under the Brussels Ia Regulation. In these excluded matters, parties will have to revert to the domestic (or bilateral treaty) jurisdiction and enforcement rules, which will be more inconvenient in terms of increased delay and costs (unless the 1968 Brussels Convention revives between its 14 contracting states, which is a debated matter in and of itself). There are some possible gap fillers: a bespoke EU-UK convention or the UK’s accession to the Lugano II Convention (which unfortunately will not happen any time soon: see here – moreover, the Lugano II Convention not yet prioritises the chosen court over the court first seized in the event of concurrent proceedings).
This brief post allows us to conclude that the 2005 Hague Choice of Court Convention is likely overall to ensure the effectiveness of UK choice of court after the Brexit transition period. However, the Convention cannot prevent a return to the domestic or bilateral treaty rules on jurisdiction and enforcement in excluded matters, such as non-exclusive choice of court agreements or maritime cases. Will be continued undoubtedly.