For two years, the British government has been implementing significant work to negotiate a solution for the day the UK leaves the European Union. But what will happen if the UK must leave the EU with “no deal” in March 2019?
On 14 September 2018 the British government published a series of technical notices, which sets out information to allow businesses and citizens to understand what a ‘no deal’ scenario would mean in legal terms.
Currently, the UK applies EU rules to determine:
These rules cover civil and commercial disputes, including insolvency, and family law matters. The UK also applies a number of international agreements because of its EU membership, which enable elements of civil judicial cooperation with non-EU countries.
In the event of ‘no deal’, there would be no agreed EU framework for ongoing civil judicial cooperation between the UK and EU countries. Most of the EU rules operate on the basis of reciprocity between EU countries. Even if the UK would continue to apply the EU rules unilaterally after BREXIT, the UK would have a third country status, which would mean that EU countries would not consider the UK to be covered by these EU rules. As a result, UK businesses, citizens and families would not benefit from these rules.
In the event of a no deal scenario, the existing reciprocity would be lost. Therefore, the UK would consider to repeal most of the existing civil judicial cooperation rules and instead use the domestic rules which each UK legal system currently applies in relation to non-EU countries. Only in some specific areas the UK would retain elements of the current EU rules, where they either do not rely on reciprocity to operate or where they form the basis for the existing domestic or international laws.
The UK government confirmed that it would continue to apply existing international agreements, such as the Hague Conventions, which in many areas provide alternative rules covering the same areas as the EU-specific instruments. Where the UK currently participates in Hague Conventions because of our EU membership (namely the 2005 Hague Convention on Choice of Court Agreements and the 2007 Hague Convention on Maintenance), there should be made the necessary arrangements to continue to participate in these international agreements.
Any party to cross-border legal disputes should consider the effect that these changes would have on any existing or future cases involving parties in EU countries. Where appropriate you may wish to seek professional legal advice on the implications.
In the absence of a deal with the EU, the following rules could be repealed for all parts of the UK:
For legal questions in these areas UK courts would instead revert to the existing domestic common law and statutory rules, which currently apply in cross border cases concerning non-EU-States (i.e. Norway, Switzerland etc).
Businesses, individuals and legal practitioners should consider how these rules interact with the domestic rules of their relevant EU country to determine how jurisdiction in cross-border disputes should be established, recognised and enforced.
In certain circumstances other countries may not recognise judgments from UK courts!
But the UK would retain the Rome I and Rome II rules on applicable law in contractual and non-contractual matters, because they generally do not rely on reciprocity.
In the event of no deal, the UK government should take the necessary steps to formally re-join the 2005 Hague Convention on Choice of Court Agreements, because the UK participates because of its EU membership from this Convention.
The majority of the Insolvency Regulation, which covers jurisdiction, applicable law and recognition of cross-border insolvency proceedings, may be repealed in the UK. But the government intends to retain the EU rules that provide for the UK courts to have jurisdiction where a company or individual is based in the UK. The EU Insolvency Regulation Tests would no longer restrict the opening of proceedings in the UK. It would become be possible to open insolvency proceedings under domestic UK law regardless of whether the debtor is based elsewhere in Europe.
But UK insolvency orders would be subject to an application for recognision in an EU country to have effect there. In certain circumstances, some EU countries may not recognise UK insolvency proceedings, for example if that would prevent creditors from taking action against the assets held in that country.
ON the other hand EU insolvency proceedings and judgments would no longer be recognisable in the UK under the EU Insolvency Regulation, but may be recognised under the UNCITRAL Model Law on Cross-Border Insolvency.
In family law the key EU regulation is Brussels IIa (Council Regulation (EC) No 2201/2003 concerning jurisdiction and the recognition and enforcement of judgments) and the Maintenance Regulation (Council Regulation (EC) No 4/2009 of 18 December 2008 on jurisdiction, applicable law, recognition and enforcement of decisions and cooperation in matters relating to maintenance obligations).
Currently the UK is contracting state to a number of Hague Conventions on family law, which cover many of the areas as the Brussels IIa and Maintenance Regulations. Where this is the case, the the existing EU rules would be repealed and switch to the relevant Hague Conventions (parental responsibility matters, including jurisdiction, recognition and enforcement, rules for the return of abducted or wrongfully retained children, maintenance recognition and enforcement, central authority cooperation)
There is also a Hague Convention on divorce recognition, which has been implemented by provisions in the Family Law Act 1986.
In child abduction cases, the UK´s participation in the 1980 Hague Convention means that most of the measures would not change. The UK would most probably repeal the child abduction override provisions contained within Brussels IIa, because they are based on reciprocity.
In some areas f family laws there exist no Hague Conventions. For instance, currently divorce jurisdiction in UK is based on the Brussels IIa rules (place of residence). This regulation would no longer exist in a “no Deal” scenario. In England, Wales and Northern Ireland the Brussels IIa rules would be repealed, but replicated in English, Welsh and Northern Irish domestic law, so that these bases apply for England, Wales and Northern Ireland for all cases.
All parts of the UK would unilaterally recognise incoming Civil Protection Measures from EU countries, to ensure that vulnerable individuals would continue to be protected.
The EU Service Regulation and the Taking of Evidence Regulation, which both rely on reciprocity to operate, might be repealed. However, there exists an equivalent Hague Convention in this area, to which the majority of EU countries are party.
The UK Government aims to provide legal certainty for businesses, families and individuals who are involved in ongoing disputes on Brexit day. Cases ongoing on 29 March 2019 will continue under the current rules.
This notice is meant for guidance only. You should consider whether you need separate professional advice before making specific preparations.
For further information please do not hesitate to contact our partner Monique Bocklage, accredited specialist attorney in Internationals Commercial Laws, Solicitor of England & Wales, EDIFICIA Rechtsanwälte Hamburg – Frankfurt – Germany www.edificia-internationals.com.
These EU instruments and international agreement apply to the UK currently:
24.09.2018, Monique Bocklage