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BRIEFING PAPER

Number CBP 08092, 22 September 2017

Brexit: civil judicial cooperation

By Catherine Fairbairn

Contents: 1. Civil judicial cooperation 2. Current position 3. Consideration by Select

Committees 4. Post-Brexit proposals 5. Views of interested parties 6. Further reading

2 Brexit: civil judicial cooperation

Contents Summary 3

1. Civil judicial cooperation 5 1.1 What is civil judicial cooperation? 5 1.2 Why is civil judicial cooperation important? 6

2. Current position 8 2.1 EU instruments 8 2.2 International agreements 9

3. Consideration by Select Committees 11 3.1 House of Lords EU Justice Sub-Committee 11

Potential problems following Brexit 11 Options for the future 13 Evidence from the Minister 15 Conclusions 15

3.2 House of Commons Justice Committee 16 Family law 16 Commercial law 17 Role of the Court of Justice of the European Union 18

4. Post-Brexit proposals 19 4.1 The UK’s position 19

The importance of having a legal framework 19 Would existing international conventions suffice post-Brexit? 20 Government seeking new agreement 20 Arrangements with countries outside the EU 21

4.2 The EU’s position paper 21 EU principles 21 UK response 22

5. Views of interested parties 24 5.1 Law Society 24 5.2 Bar Council 24 5.3 Institute of Directors 25

6. Further reading 26

Cover page image copyright Attributed to: Drapeaux, palais de Rajoy by Bernard Blanc. Licensed under CC BY 2.0 / image cropped.

3 Commons Library Briefing, 22 September 2017

Summary Increasingly, disputes may involve nationals or companies from more than one country. Civil judicial cooperation is the legal framework that governs the interaction between different legal systems in cross-border situations.

In order to provide certainty and to avoid litigation in the courts of more than one country on the same dispute, a set of rules sets out:

• which country’s law applies;

• which country’s courts have jurisdiction to hear the case;

• the recognition and enforcement in one country of a judgment obtained in another country;

• the approach to managing insolvency.

Civil judicial cooperation may be relevant in a number of contexts, including, for example, commercial agreements; civil cases (eg personal injury); family disputes, including divorce and arrangements for children; and insolvency.

Consideration by Select Committees In reports published in March 2017, the House of Lords EU Justice Sub-Committee and the House of Commons Justice Committee both expressed concern about the uncertainty which would arise in the absence of alternative arrangements to the EU Regulations now in place. Both Committees called on the Government to provide details of how they intend to proceed.

Post-Brexit proposals On 13 July 2017, the EU published a position paper, Judicial Cooperation in Civil and Commercial matters, which presents the EU’s position in the context of separation. It sets out the main principles that the Commission considers should apply on the withdrawal date to the winding down of the existing relationship between the EU and the UK. The paper deals only with how withdrawal will affect existing proceedings, including choice of court and choice of law.

The Government’s policy paper, Providing a cross-border civil judicial cooperation framework - a future partnership paper, published on 22 August 2017, is more wide-ranging. The UK’s position is that it is in the interests of both the UK and the EU for cooperation in this field to continue. It has acknowledged the need to negotiate and agree a new civil judicial cooperation framework for future cases, in order to maintain confidence and certainty in cross-border interactions. The UK is seeking a new agreement mirrored on existing provisions, although it does not set out in detail how this might be structured.

The Government considers that, in cross border interactions, citizens and businesses need to have continuing confidence about which country’s courts would deal with any dispute, which laws would apply, and to know that judgments and orders obtained would be recognised and enforced, as is the case now. It is the Government’s view that a new agreement with the EU would make cross border civil litigation involving UK and EU parties “easier, cheaper and more efficient for all involved”.

The Government does not consider that existing international conventions would be sufficient, on their own, to deal with civil judicial cooperation post-Brexit.

4 Brexit: civil judicial cooperation

The UK also intends to incorporate into domestic law the Rome I and II instruments on choice of law and applicable law in contractual and non-contractual matters. These regulations do not require reciprocity.

The UK has reiterated that when it leaves the EU, the CJEU will no longer have direct jurisdiction in the in the UK, because the CJEU derives its jurisdiction and authority from the EU Treaties. However, it states that “where appropriate, the UK and the EU will need to ensure future civil judicial cooperation takes into account regional legal arrangements, including the fact that the CJEU will remain the ultimate arbiter of EU law within the EU”.

The Government’s paper also responds to the EU’s paper and sets out the Government’s position on what should happen at withdrawal to existing cases, in the absence of any new agreement (this is stated to be without prejudice to negotiations on the future partnership). The UK’s position, in that event, appears to be largely in agreement with the EU’s position paper, but not identical on all aspects.

Arrangements with countries outside the EU The UK intends to continue to participate in the Hague Conference on Private International Law and the United Nations Commission on International Trade Law (UNCITRAL). The UK also intends to participate in those Hague Conventions to which it is already a party and those in which it currently participates as an EU member.

The Government will seek to continue to participate in the 2007 Lugano Convention, which, by virtue of membership of the EU, forms the basis for the UK’s civil cooperation with Norway, Iceland and Switzerland.

Views of interested parties The Law Society considers the Government’s post-Brexit proposals, as set out in its policy paper, to be a “step in the right direction”. It said that it was encouraging that the Government had chosen to listen to solicitors’ concerns and give civil justice cooperation “the high priority it clearly needs”.

The Bar Council welcomed the Government’s policy paper but said that “the devil will be in the detail”.

The Institute of Directors has commented that “The success of Brexit will depend on such seemingly technical details as cross-border judicial cooperation”.

5 Commons Library Briefing, 22 September 2017

1. Civil judicial cooperation

1.1 What is civil judicial cooperation?

Civil judicial cooperation is the legal framework that governs the interaction between different legal systems in cross-border situations.1

In order to provide certainty and to avoid litigation in the courts of more than one country on the same dispute, a set of rules sets out:

• which country’s law applies;

• which country’s courts have jurisdiction to hear the case;

• the recognition and enforcement in one country of a judgment obtained in another country;

• the approach to managing insolvency.

Civil judicial cooperation may be relevant in a number of contexts, including, for example:

• commercial agreements;

• civil cases (eg personal injury);

• family disputes, including divorce and arrangements for children;

• insolvency.

The House of Lords EU Justice Committee has provided examples of the types of case where EU regulations in this area apply:

8. In the area of family law, the [Brussels IIa Regulation] and the [Maintenance Regulation] provide certainty and protection to children and families in the often fractious and difficult environment of family disputes. Given that many people have taken advantage of the EU’s rules facilitating the free movement of people, such disputes can be made additionally complicated by a cross-border element … These two Regulations seek to lessen the impact of this aggravating factor.

9. In the civil field, the [Brussels I Regulation recast (BIR)] facilitates the affairs of all those engaged in the myriad cross-border links enabled by the EU’s rules, from the tourist hit by a car in Warsaw, the consumer seeking redress for a defective product in Lisbon, to the employee seeking equal pay in London, and the tenant enforcing their rights in Nicosia. For businesses operating within the Single Market, from large multinational corporations to Small and Medium Enterprises, the BIR offers all these people the reassurance that when problems arise legal remedies are readily available and easily enforceable across borders...2

1 Department for Exiting the European Union, Providing a cross-border civil judicial

cooperation framework - a future partnership paper, 22 August 2017, paragraph 6 2 House of Lords European Union Committee, Brexit: justice for families, individuals

and businesses?, 20 March 2017, HL134 2016-17, paragraphs 8 and 9

Family law cases

Civil law cases

The rules may be relevant to disputes between businesses, between an individual and a business, between two individuals and in family disputes

6 Brexit: civil judicial cooperation

1.2 Why is civil judicial cooperation important?

In the context of Brexit, the Government has set out why the certainty provided by civil judicial cooperation is important for families, consumers, businesses and investors:

12. The world is more interconnected than ever and families increasingly come from or reside in more than one country – there are approximately one million British citizens living in other EU Member States and some three million EU citizens living in the UK. When things go wrong, families need to know that they will be able to resolve disputes in a clear, predictable way, without undue delay.

13. Consumers in the EU and the UK will continue to buy from each other’s retailers and manufactures and need a clear process for resolving any disputes that arise. Consumers should be confident that if they have a dispute they can bring a claim in their own country’s courts regardless of where the supplier is based, and that the resulting judgment will be enforceable.

14. Businesses and investors value certainty. The EU and the UK will continue to be key trading partners and to invest in each other’s economies. Confidence in cross-border commercial contracts and investment relationships is underpinned and enhanced by clear rules governing: which country’s courts hold responsibility for resolving disputes; the enforcement of the resulting judgment in other countries where a party has assets; and the approach to managing insolvency in cross-border situations.

15. In particular, contracting parties often agree which courts will have jurisdiction to hear their dispute, and which country’s law will apply. Common rules which ensure respect for such agreements support business confidence to trade, and minimise the potential for delaying tactics in the event of a dispute. EU and UK businesses, both big and small, should have confidence that when they trade with one another they can resolve disputes swiftly and with certainty.3

The House of Lords EU Justice Committee has spoken of the continuing significance of the matters covered by EU Regulations dealing with civil judicial cooperation:4

The evidence clearly illustrates that these three Regulations and the system they engender play a significant role in the daily lives of UK and EU citizens, families and businesses, who work, live, travel and do business within the EU.

Human relations can go wrong in many ways, including:

• Divorce;

• Disputed custody of children;

• A medical negligence claim;

• Litigation arising out of a car accident abroad;

• Failure to perform a contract; or

3 Ibid paragraphs 12-15, footnotes omitted 4 The Regulations are set out below in section 3.1 of this paper

Increasingly, disputes may involve nationals or companies from more than one country

7 Commons Library Briefing, 22 September 2017

• An employment dispute.

All three Regulations provide certainty, predictability and clarity about where the resulting legal dispute should be pursued.

They also provide for the automatic recognition and enforcement of judicial decisions and judgments throughout the EU. They regulate a pan-European system of civil justice cooperation, which has been proved to work and reflects the UK’s legal culture. The myriad problems that they seek to address will not cease when we leave the EU.5

5 Ibid, p3

8 Brexit: civil judicial cooperation

2. Current position

A range of EU and international instruments set out the current legal framework.

2.1 EU instruments The Government has provided the following information about existing EU measures:6

6 Department for Exiting the European Union, Providing a cross-border civil judicial

cooperation framework - a future partnership paper, 22 August 2017, pp3-4

9 Commons Library Briefing, 22 September 2017

Information about the current position in the EU is provided on the European Commission website, Judicial cooperation.7

Since the referendum result, the Government has decided to opt in to the renegotiation of Brussels IIa. Another Library briefing paper provides further information, Brexit: the Brussels IIa regulation – cross-border child contact cases, and child abduction.8

2.2 International agreements The Government has also provided information about existing international agreements:9

7 Accessed 21 September 2017 8 Number 07764, 11 November 2016 9 Department for Exiting the European Union, Providing a cross-border civil judicial

cooperation framework - a future partnership paper, 22 August 2017, pp7-9

10 Brexit: civil judicial cooperation

11 Commons Library Briefing, 22 September 2017

3. Consideration by Select Committees

Summary

In reports published in March 2017, the House of Lords EU Justice Sub-Committee and the House of Commons Justice Committee considered the issue of civil judicial cooperation. Both expressed concern about the uncertainty which would arise in the absence of alternative arrangements to the EU Regulations now in place. Both Committees called on the Government to provide details of how they intend to proceed.

3.1 House of Lords EU Justice Sub-Committee On 20 March 2017, the House of Lords EU Justice Sub-Committee published a report, Brexit: justice for families, individuals and businesses?.10 The report considers the ramifications of Brexit for the EU’s programme of civil justice cooperation introduced by three Regulations:

• Brussels I (recast) on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters;

• Brussels IIa concerning jurisdiction and the recognition and enforcement of judgments in matrimonial matters and the matters of parental responsibility; and

• the Maintenance Regulation on jurisdiction, applicable law, recognition and enforcement of decisions and cooperation in matters relating to maintenance.

Until the UK withdraws from the EU, the Court of Justice of the European Union (CJEU) deals with the interpretation and application of the three Regulations.

The Committee stated that its inquiry had also been shaped by the Government’s view that, after the UK left the EU, there could be no jurisdiction for the CJEU.

The Report includes further detailed information about each of these Regulations, their development, and the influence of the UK over their content. It also considers potential problems if the UK leaves the EU without alternative arrangements in place, together with options for the future.

Potential problems following Brexit The Committee considered the potential problems of the UK withdrawing from the EU without there being alternative arrangements in place.

10 House of Lords European Union Committee, Brexit: justice for families, individuals

and businesses?, 20 March 2017, HL134 2016-17

12 Brexit: civil judicial cooperation

Brussels I recast (BIR)

Potential problems include:

• loss of certainty;

• detrimental impact on London’s legal market resulting from foreign businesses not naming England and Wales as the jurisdiction of choice in commercial agreements;

• inability to enforce judgments;

• loss of control over future iterations of Regulations.

The Committee stated that evidence had suggested that the loss of the BIR and the associated reciprocal rules would lead to “an inevitable increase in cross-border litigation for UK based citizens and businesses as they continue to trade and interact with the remaining 27 EU Member States”.11

The Committee did not consider that the Government’s proposed legislation (then referred to as the Great Repeal Bill (GRB) but now the European Union (Withdrawal Bill) would be able to deal with the issues involved:

The evidence we received is clear and conclusive: there is no means by which the reciprocal rules that are central to the functioning of the BIR can be replicated in the Great Repeal Bill, or any other national legislation. It is therefore apparent that an agreement between the EU and the UK on the post-Brexit application of this legislation will be required, whether as part of a withdrawal agreement or under transitional arrangements.12

Brussels IIa (BIIa) and the Maintenance Regulation (MR)

These regulations deal with the personal lives of adults and children and the Committee noted their significance:

These Regulations may appear technical and complex, but the practitioners we heard from were clear that in the era of modern, mobile populations they bring much-needed clarity and certainty to the intricacies of cross-border family relations.13

The Committee set out potential problems if the UK leaves the BIIa and the MR without having alternative arrangements in place:

• loss of certainty and predictability – the Report quoted witnesses who detailed potential consequences:

85. David Williams QC feared the loss of the uniformity introduced by the Regulations, which is underpinned by the CJEU. He said the remaining Member States would “carry on interpreting and applying [these Regulations] with the assistance of the CJEU”, while the UK would be applying the 1996 Hague Convention on parental responsibility and protection of children (see Box 11). If this happened, he predicted a detrimental impact on children: it would be “like having a Windows operating system and an Apple operating system: they just do not talk to each other”.

11 Ibid, paragraph 53 12 Ibid, paragraph 60 13 Ibid, paragraph 82

13 Commons Library Briefing, 22 September 2017

86. Professor Bailey-Harris also feared the loss of uniformity, which was “a real danger across the board”. For example, “the standard concept of habitual residence, that applies to children, divorce and maintenance. There is a real danger of slipping back into a lack of uniformity”.14

• problems enforcing court decisions;

• loss of provisions on child abduction;

• loss of the application of the relevant provisions in domestic law;

• adverse impact on family court system.

The Committee concluded that “To walk away from these Regulations without putting alternatives in place would seriously undermine the family law rights of UK citizens and would, ultimately, be an act of self-harm”.15

As with the BIR, the Committee did not consider that the Government’s proposed legislation would be able to deal with the potential problems following withdrawal, and called on the Government to secure alternative arrangements:

97. It is clear that the Government’s promised Great Repeal Bill will be insufficient to ensure the continuing application of the Brussels II and Maintenance Regulations in the UK post-Brexit: we are unaware of any domestic legal mechanism that can replicate the reciprocal effect of the rules in these two Regulations. We are concerned that, when this point was put to him, the Minister did not acknowledge the fact that the Great Repeal Bill would not provide for the reciprocal nature of the rules contained in these Regulations.

98. We are not convinced that the Government has, as yet, a coherent or workable plan to address the significant problems that will arise in the UK’s family law legal system post-Brexit, if alternative arrangements are not put in place. It is therefore imperative that the Government secures adequate alternative arrangements, whether as part of a withdrawal agreement or under transitional arrangements.16

Options for the future In the interests of predictability and certainty, the Committee endorsed the outcome of the Government’s consultations with interested parties that an effective system of cross-border judicial cooperation with common rules would be essential post-Brexit.17

The Committee said that the balance of evidence was against a return to common law rules:

114. The balance of the evidence was overwhelmingly against returning to the common law rules, which have not been applied in the European context for over 30 years, as a means of addressing the loss of the Brussels I Regulation (recast). We note that a return to the common law would also not be the Government’s choice.

14 Ibid, paragraphs 85-86 (footnotes omitted) 15 Ibid, paragraph 93 16 Ibid, paragraphs 97-98 17 Ibid, paragraph 37

14 Brexit: civil judicial cooperation

115. A return to the common law rules would, according to most witnesses, be a recipe for confusion, expense and uncertainty. In our view, therefore, the common law is not a viable alternative to an agreement between the EU and the UK on the post-Brexit application of the Brussels I Regulation (recast).

116. Nonetheless, in contrast to key aspects of the two Regulations dealing with family law, Professor Fentiman was of the opinion that in the event that the Government is unable to secure a post-Brexit agreement on the operation of the Brussels I Regulation (recast), a return to the common law rules would at least provide a minimum ‘safety net’.18

With regard to moving forward, the Committee distinguished between the BIR and the two family law Regulations.

BIR

The Committee set out “a workable solution” which did not involve direct jurisdiction of the CJEU, although it acknowledged that it was not without problems:

126. The combination of UK membership of the Lugano Convention, implementation of the Rome I and II Regulations through the Great Repeal Bill, and ratification of the Hague Convention on choice-of-court agreements, appears to offer at least a workable solution to the post-Brexit loss of the BIR.

127. The inclusion in the Lugano Convention of a requirement for national courts to “pay due account” to each other’s decisions on the content of the Brussels I Regulation, without accepting the direct jurisdiction of the CJEU, could be compatible with the Government’s stance on the CJEU’s status post-Brexit, as long as the Government does not take too rigid a position.

128. This approach will come at a cost. In particular, it will involve a return to the Brussels I Regulation, with all its inherent faults, which the UK as an EU Member State succeeded, after much time and effort, in reforming.19

BIIa and MR

The Committee did not consider that the position in respect of family law could be dealt with in the same way as the BIR, and said that there was “no satisfactory fall-back position”:

135. In contrast to the civil and commercial field, we are particularly concerned that, save for the provisions of the Lugano Convention on cases involving maintenance, there is no satisfactory fall-back position in respect of family law.

136. Our witnesses were unanimous that a return to common law rules for UK-EU cases would be particularly detrimental for those engaged in family law litigation. The Bar Council also suggested that an already stretched family court system would not be able to cope with the expected increase in litigation.

137. The Bar Council specifically called for the EU framework in this field to be sustained post-Brexit. But while this may be the optimal solution in legal terms we cannot see how such an outcome can be achieved without the CJEU’s oversight.

18 Ibid, paragraphs 114-116 19 Ibid, paragraphs 126-128

15 Commons Library Briefing, 22 September 2017

138. Other witnesses suggested the UK rely on the 1996 Hague Convention on Jurisdiction, Applicable Law, Recognition, Enforcement and Co-operation in respect of Parental Responsibility and Measures for the Protection of Children. But the evidence suggests that this Convention offers substantially less clarity and protection for those individual engaged in family law based litigation.20

Evidence from the Minister The Committee noted that the then Justice Minister, Sir Oliver Heald, approached questions regarding the UK’s post-Brexit options from two standpoints:

• the Government’s desire to make a new agreement with the EU to deal with these issues for the future:

First, [the Minister] emphasised the Government’s desire “to make a new agreement, a new relationship, with the EU for the future that is constructive and tackles these important issues”. He stated that the Government’s “preference is to reach agreement within the two-year period and for it to be implemented thereafter”. If this proved impossible with regard to the BIR, he noted that “there are common law rules”.

As for the BIIa, he recognised that it “was very helpful”, but he did not confirm the Bar Council’s suggestion that the Regulation’s framework should be maintained post-Brexit: “We will not necessarily ask to be in Brussels IIa; we may well make a separate agreement that one hopes has its main provisions”.21

• the Government’s view that, post-Brexit, the CJEU would not oversee anything:

Second, the Minister frequently repeated the Government’s view that post-Brexit the CJEU “would not [be] overseeing anything that we do”. When pressed on the detail of any post-Brexit arrangements, and the issue of judicial oversight, he said that “other arrangements would have to be made”. He acknowledged that there were “existing tools that one could look at, such as Lugano, but we are not at that point”. He also suggested other models, such as the EU’s trade agreements with Canada and South Korea.22

Conclusions The Committee concluded by setting out concerns about the Government’s approach and by calling on the Government to set out a coherent plan for addressing the post-Brexit situation:

142. The Minister held fast to the Government’s policy that the Court of Justice of the European Union will have no jurisdiction in the UK post-Brexit. We remain concerned, however, that if the Government adheres rigidly to this policy it will severely constrain its choice of adequate alternative arrangements.

143. Clearly, if the Government wishes to maintain these Regulations post-Brexit, it will have to negotiate alternative arrangements with the remaining 27 Member States to provide

20 Ibid, paragraphs 135-138 21 Ibid, paragraphs 139-40 (footnotes with question references omitted) 22 Ibid, paragraph 141 (footnotes with question references omitted)

16 Brexit: civil judicial cooperation

appropriate judicial oversight. But the Minister was unable to offer us any clear detail on the Government’s plans. When pressed on alternatives, he mentioned the Lugano Convention and “other arrangements”. We were left unable to discern a clear policy.

144. The other examples the Minister drew on, Free Trade Agreements with Canada and South Korea, do not deal with the intricate reciprocal regime encompassed by these three Regulations. We do not see them as offering a viable alternative.

145. We believe that the Government has not taken account of the full implications of the impact of Brexit on the areas of EU law covered by the three civil justice Regulations dealt with in this report. In the area of family law, we are very concerned that leaving the EU without an alternative system in place will have a profound and damaging impact on the UK’s family justice system and those individuals seeking redress within it.

146. In the civil and commercial field there is the unsatisfactory safety net of the common law. But, at this time, it is unclear whether membership of the Lugano Convention, which is in itself imperfect, will be sought, offered or available.

147. We call on the Government to publish a coherent plan for addressing the post-Brexit application of these three Regulations, and to do so as a matter of urgency. Without alternative adequate replacements, we are in no doubt that there will be great uncertainty affecting many UK and EU citizens.

3.2 House of Commons Justice Committee On 22 March 2017, the House of Commons Justice Committee published a report, Implications of Brexit for the justice system.23

Part 3 of the Committee’s report provides detailed information about the current EU regulations and other conventions governing family law and commercial law.

Family law The Justice Committee described the Brussels IIa Regulation as forming “the heart of cross-border family law in the EU” and set out the issues within its scope as including:

• divorce, legal separation and marriage annulment;

• arrangements for children’s residence and contact with others;

• a system for the return of abducted children, enhancing the 1980 Hague Convention on the Civil Aspects of International Child Abduction;

• guardianship and curatorship;

• foster care; and

• administration and protection of children’s property.24

23 House of Commons Justice Committee, Implications of Brexit for the justice system,

22 March 2017, HC 750 2016–17 24 Ibid, paragraph 19

The Committee considered that family law cases would be particularly affected by the loss of the Regulations, but there would also be an impact on other types of case

17 Commons Library Briefing, 22 September 2017

The complementary Maintenance Regulation sets out similar rules of jurisdiction for inter-country disputes over family maintenance payments.

The Justice Committee called both regulations procedural rather than substantive:

that is, they do not set grounds for divorce, for example, across the EU; instead, they help to resolve cases by determining where cross-border cases should be heard and adjudicated upon (known as jurisdiction), and ensuring that the decisions of the court with jurisdiction are recognised and enforced throughout the EU.25

The Committee also noted the complex relationship between Brussels IIa and the Hague Conventions of 1980 and 1996 on the issue of child abduction.26

The Committee considered the EU Regulations to be better than the rules which would apply in default, and called on the Government to maintain cooperation with the EU on family justice matters:

24. Brussels IIa and the Maintenance Regulation are improvements over their default alternatives. They are not without fault: races to issue resulting from Brussels IIa’s divorce provisions are particularly undesirable. Nonetheless, mutual recognition and enforcement of judgments in family cases is of demonstrable value in resolving cross-border instances of child abduction and non-payment of maintenance.

25. We recommend that the Government should seek to maintain the closest possible cooperation with the EU on family justice matters, and in particular to retain a system for mutual recognition and enforcement of judgments.

Commercial law The Justice Committee noted evidence which indicated that, internationally, many firms with little or no other connection to the UK choose the law and courts of England and Wales to govern their contracts.27

The report includes information about the EU regulations in this area, including Brussels I Recast, 28 which, the Committee stated, “protects UK residents from being sued in unconnected EU courts (so-called ‘exorbitant jurisdiction’)”.29

The Justice Committee noted that the Government cannot incorporate Brussels I into domestic law unilaterally:

the Regulation requires reciprocity, and a freestanding UK commitment to respect other countries’ jurisdictions and judgments would neither required them to return the favour nor provide a mechanism for the resolution of any disputes arising on these matters.30

25 Ibid 26 Ibid, paragraph 20 27 Ibid, paragraph 26 28 EU Regulation 1215/2012 29 House of Commons Justice Committee, Implications of Brexit for the justice system,

22 March 2017, HC 750 2016–17, paragraph 27 30 Ibid, paragraph 28

Despite their faults, the Justice Committee considers BIIa and the MR to be better than their default alternatives

18 Brexit: civil judicial cooperation

The Justice Committee recommended that the Government should aim to replicate the provisions of Brussels I Recast as closely as possible in order to protect the UK’s position in commercial matters:

We recommend that protecting the UK as a top-class commercial law centre should be a major priority for the Government in Brexit negotiations given the clear impacts on the UK economy of failure to do so. Protecting court choices and maintaining mutual recognition and enforcement of judgments are central to this objective: the Government should aim to replicate the provisions of Brussels I Recast as closely as possible, perhaps using the EU-Denmark agreement as a blueprint. As a minimum, it must endeavour to secure membership of Lugano II and the 2005 Hague Convention in its own right. Rome I and II should be brought into domestic law. The Government must also address the potential liabilities for non-performance of contractual duties that financial institutions may face as a consequence of Brexit.31

Role of the Court of Justice of the European Union The Justice Committee considered that for procedural matters, conceding “a small role” for the CJEU “could be necessary for continued and mutually beneficial cooperation”.32 It referred to this as “a price worth paying”:

The end of the substantive part of the CJEU’s jurisdiction in the UK is an inevitable consequence of Brexit. If the UK and the EU could continue their mutually-beneficial cooperation in the ways we outline earlier without placing any binding authority at all on that Court’s rulings, that could be ideal. However, a role for the CJEU in respect of essentially procedural legislation concerning jurisdiction, applicable law, and the recognition and enforcement of judgments, is a price worth paying to maintain the effective cross-border tools of justice discussed throughout our earlier recommendations.33

31 Ibid, paragraph 32 32 Ibid, paragraph 33 33 Ibid, paragraph 35

19 Commons Library Briefing, 22 September 2017

4. Post-Brexit proposals

Summary

The Government has acknowledged the need to negotiate and agree a new civil judicial cooperation framework in order to maintain confidence and certainty in cross-border interactions. It is seeking a new agreement mirrored on existing provisions.

The Government has stated that, post-Brexit, the UK will no longer be part of the civil judicial cooperation system that exists between EU Member States. It recognises the need to negotiate and agree a new framework.34

On 13 July 2017, the EU published a position paper, Judicial Cooperation in Civil and Commercial matters.35 This deals only with how withdrawal will affect existing proceedings, choice of court and choice of law.

The Government’s policy paper, Providing a cross-border civil judicial cooperation framework - a future partnership paper, published on 22 August 2017, is more wide-ranging. It sets out the UK’s position that a new framework is needed for future cases, although it does not set out in detail how this would be achieved. The Government’s paper also responds to the EU’s paper, setting out its position on what should happen at withdrawal to existing cases, in the absence of any new agreement.

In addition, the UK’s paper also details the existing EU instruments and international agreements and what they cover.

4.1 The UK’s position The importance of having a legal framework The Government acknowledges the importance, for UK and EU consumers, citizens, families and businesses, of having coherent common rules to govern interactions between legal systems. The Government considers that the current framework provides predictability and certainty:

It plays an important role in enabling businesses to trade with confidence across borders, providing legal certainty in cross-border transactions and avoiding delays and excessive costs where individual and family rights need to be protected in cross-border situations.36

34 Department for Exiting the European Union, Providing a cross-border civil judicial

cooperation framework - a future partnership paper, 22 August 2017, paragraph 8 35 TF50 (2017) 9/2 36 Department for Exiting the European Union, Providing a cross-border civil judicial

cooperation framework - a future partnership paper, 22 August 2017,paragraph 7

20 Brexit: civil judicial cooperation

Would existing international conventions suffice post-Brexit? The Government does not consider that existing international conventions would be sufficient, on their own, to deal with civil judicial cooperation post-Brexit:

Existing international conventions can provide for rules in some areas, but they would not generally provide the more sophisticated and effective interaction, based on mutual trust between legal systems, that currently benefits both EU and UK business, families and individual litigants.37

Government seeking new agreement The UK is seeking an arrangement for the future which is similar to the current position:

The UK will therefore seek an agreement with the EU that allows for close and comprehensive cross-border civil judicial cooperation on a reciprocal basis, which reflects closely the substantive principles of cooperation under the current EU framework.38

The Government considers that, in cross border interactions, citizens and businesses need to have continuing confidence about which country’s courts would deal with any dispute, which laws would apply, and to know that judgments and orders obtained would be recognised and enforced, as is the case now.39 It is the Government’s view that a new agreement with the EU would make cross border civil litigation involving UK and EU parties “easier, cheaper and more efficient for all involved”.40

The Government also speaks of a framework which would “mirror closely the current EU system and would provide a clear basis to support cross-border activities, after the UK’s withdrawal”.41

From the list of current EU instruments, the UK intends to incorporate into domestic law the Rome I and II instruments on choice of law and applicable law in contractual and non-contractual matters.42 These regulations do not require reciprocity.43

The Government notes that Scotland and Northern Ireland have their own separate judicial systems and states that it will continue to work with the Devolved Administrations and stakeholders in Scotland and Northern Ireland to ensure that a future civil judicial cooperation agreement benefits all parts of the UK.44

37 Ibid, paragraph 18 38 Ibid, paragraph 19 39 Ibid, paragraph 3 40 Ibid, paragraph18 41 Ibid, paragraph 25 42 Ibid, paragraph 19 43 House of Lords European Union Committee, Brexit: justice for families, individuals

and businesses?, 20 March 2017, HL Paper 134 2016-17, paragraph 125, Box 16 44 Department for Exiting the European Union, Providing a cross-border civil judicial

cooperation framework - a future partnership paper, 22 August 2017, paragraph 16

Scotland and Northern Ireland

21 Commons Library Briefing, 22 September 2017

The Government considers that both the UK and the EU would benefit from an interim period that allows for a smooth transition to a new relationship in civil judicial cooperation.45

The UK has reiterated that when it leaves the EU, the CJEU will no longer have direct jurisdiction in the UK, because the CJEU derives its jurisdiction and authority from the EU Treaties. However, it states that “where appropriate, the UK and the EU will need to ensure future civil judicial cooperation takes into account regional legal arrangements, including the fact that the CJEU will remain the ultimate arbiter of EU law within the EU”.46

Professor of Law, Steve Peers has commented:

The reader gets the distinct impression that the UK is happy to continue participating in all the EU laws it has signed up to already, except for removing the ECJ’s direct jurisdiction. It’s a bit like tearing down and rebuilding a house, in order to change one brick.47

The UK’s policy paper does not provide further detail as to how a new framework might be structured.

Arrangements with countries outside the EU The UK intends to continue to participate in the Hague Conference on Private International Law and the United Nations Commission on International Trade Law (UNCITRAL). The UK also intends to participate in those Hague Conventions to which it is already a party and those in which it currently participates as an EU member.

The Government will also seek to continue to participate in the 2007 Lugano Convention, which, by virtue of membership of the EU, forms the basis for the UK’s civil cooperation with Norway, Iceland and Switzerland.48

4.2 The EU’s position paper EU principles The EU has presented its position on civil judicial cooperation in the context of separation. The EU’s position paper sets out the main principles that the Commission considers should apply on the withdrawal date to the winding down of the existing relationship between the EU and the UK.

The EU proposes that:

• the Withdrawal Agreement should ensure that the relevant provisions of EU law on jurisdiction, recognition and enforcement applicable on the withdrawal date should continue to govern

45 Ibid, paragraph 23 46 Ibid, paragraph 20 47 Professor Steve Peers, “Cross-border civil litigation after Brexit: analysis of the UK

government’s proposals”, EU Law Analysis, 22 August 2017 [accessed 21 September 2017]

48 Ibid, paragraphs 21-22

Interim period

The role of the CJEU

22 Brexit: civil judicial cooperation

judicial proceedings and procedures in civil and commercial matters pending on the withdrawal date;

• the relevant provisions of EU law applicable on the withdrawal date should continue to apply to choices of forum and choices of law made prior the withdrawal date;

• judicial cooperation procedures that are ongoing on the withdrawal date should continue to be governed by the relevant provisions of EU law applicable on the withdrawal date.

UK response The Government considers that it is in the interests of both the UK and the EU for cooperation in this field to continue and is seeking a new agreement for the future.

However, without prejudice to the negotiations on the future partnership between the UK and the EU, Annex A to its position paper sets out the UK’s view of the principles that should govern the winding down of the existing relationship, in the event that no agreement on a future relationship can be reached.

The UK’s position, in that event, appears to be largely in agreement with the EU’s position paper (but not exactly the same on all aspects). The Government states that its guiding principle in negotiations on separation issues is avoiding disruption and providing legal certainty. It states that:

• existing EU rules governing the applicable law for contractual and non-contractual obligations should continue to apply to contracts concluded before the withdrawal date, and in respect of non-contractual liability, to events giving rise to damage which occur before withdrawal date;

• existing EU rules governing jurisdiction to determine disputes should continue to apply to all legal proceedings instituted before withdrawal date;

• where a choice of court has been made prior to withdrawal date, existing EU rules should continue to apply to establishment of jurisdiction, and recognition and enforcement of any resulting judicial decision, where a dispute arises to which such a choice applies, whether before or after withdrawal date;

• existing EU rules governing recognition and enforcement of judicial decisions should continue to apply to judicial decisions given before the withdrawal date, and to judicial decisions given after the withdrawal date in proceedings which were instituted before that date;49

• judicial cooperation procedures and requests for information within the European Judicial Network in civil and commercial matters which are pending on the date of withdrawal should continue to be governed by existing EU rules. The UK agrees that there is a need to identify the appropriate procedural

49 The EU’s position paper on this point refers only to “all judicial decisions given

before the withdrawal date”

23 Commons Library Briefing, 22 September 2017

stage that has to have been reached for the procedure to continue in accordance with those rules.50

50 Ibid, pp9-10

24 Brexit: civil judicial cooperation

5. Views of interested parties

5.1 Law Society The Law Society considers the Government’s post-Brexit proposals, as set out in its policy paper, to be a “step in the right direction”.51

Law Society vice president, Christina Blacklaws, said:

Civil justice cooperation rules set the basic parameters that let us live, work and play across Europe.

They allow us clear ways to resolve problems when they occur across borders, and give business defined rules to follow with the confidence UK business needs to trade and invest.

Making sure these clear and effective rules continue or are replaced will be a vital part of making Brexit work.

That is why the Law Society has been calling from the start for a strong commitment to retaining these important legal mechanisms. Today the government has given that strong commitment – and that important first step towards delivering on it.

Ms Blacklaws said that there was still much work ahead, but that it was encouraging that the Government had listened to solicitors’ concerns:

The government clearly has a big task ahead of it to turn these ideas into details that can effectively replace the range of agreements and institutions outlined in the paper.

Setting out this vision today is a welcome first step on that journey. It is encouraging that the government has chosen to listen to the concerns raised by the solicitor profession, and give civil justice cooperation the high priority it clearly needs.

It will need to ensure that new arrangements not only deliver on the aspirations they have outlined, but meet the needs of both the UK and EU citizens and businesses who will use them, all while working through the give-and-take of the Brexit negotiations.

5.2 Bar Council Chair of the Bar Council, Andrew Langdon QC, welcomed the Government’s policy paper but said that “the devil will be in the detail”:

On the face of it, the government’s position paper Providing a cross-border civil judicial cooperation framework. A Future Partnership Paper, includes sensible and sound proposals and shows that the government has been in listening mode when talking to the Bar Council and others on this crucial topic.

The position paper rightly identifies the mutual benefits that can be expected to flow from continuing co-operation between the UK and the EU, for citizens as well as businesses who are naturally looking for certainty to plan ahead. We are encouraged by the fact the government sees value in preserving much of what is already in place in existing arrangements between the UK and the

51 Law Society, Civil justice cooperation vital to post-Brexit relationship,

22 August 2017 [accessed 14 September 2017]

25 Commons Library Briefing, 22 September 2017

EU, as well as the UK’s relationships internationally and third parties.

However, the devil will be in the detail. We will, therefore, continue to provide our expertise in our ongoing discussions with the government on this topic.”52

5.3 Institute of Directors Allie Renison, Head of EU and Trade Policy, commented ahead of the Government’s position paper, and spoke of the importance of future cooperation:

The success of Brexit will depend on such seemingly technical details as cross-border judicial cooperation. Any business conducted across borders involves risks, and it’s one of the areas where companies value agreements between governments that give them certainty about the process if something goes wrong.

The IoD has welcomed the push from government to ensure that the forthcoming paper not only addresses ongoing civil and commercial disputes for businesses operating across the EU, but also lays out principles for future judicial cooperation between both sides.

While English law provisions in legal contracts often provide a solid foundation in the event of cross-border disputes, companies will need further reassurance that domestic courts and tribunals across the UK and EU will continue to enforce judgements and contracts in accordance with sound legal cooperation principles.

While we expect there may be some overlap with negotiations on whatever dispute resolution mechanism may replace the European Court of Justice's jurisdiction in the UK, we would hope that reciprocal respect for the rule of law allows for rapid progress towards agreement in this area - given that both sides have now issued proposals on this topic.53

52 Bar Council response to Providing a cross-border civil judicial cooperation

framework. A Future Partnership Paper, the Barrister, posted on August 22 53 Institute of Directors, IoD responds to Government paper on civil judicial

cooperation, 21 August 2017 [accessed 14 September 2017]

26 Brexit: civil judicial cooperation

6. Further reading • Law Society of England and Wales, Brexit and the law,

January 2017;

• Bar Council Brexit Working Group, The Brexit Papers, 3rd edition, June 2017:

─ Civil Jurisdiction and Judgments Paper 4;

─ Family Law Paper 6;

• Professor Steve Peers, “Cross-border civil litigation after Brexit: analysis of the UK government’s proposals”, EU Law Analysis, 22 August 2017.54

54 All links accessed 14 September 2017

BRIEFING PAPER Number CBP 08092 22 September 2017

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