The Impact of Brexit on Cross-Border Litigation

Eoin Martin seeks to unravel the new procedures that will apply from the start of 2021

On 31st December 2020, the transition period, during which EU law continued to apply to the UK under the Withdrawal Agreement, will end. EU regulations which currently govern jurisdiction, recognition and enforcement of judgments, service, evidence, insolvency and choice of law, will all have to be replaced by alternative rules and procedures from the start of 2021.

This article, which is based on a seminar for the commercial committee of the DSBA on 19th November 2020, does not deal with family law and other areas impacted by Brexit.

Jurisdiction and the recognition and enforcement of judgments is currently governed by Regulation 1215 / 2012 (“Brussels Recast”). When the UK leaves this regime, from an Irish perspective, it will be treated like other non-EU countries such as the USA.The European Enforcement Order regime under Regulation (EC) 805 / 2004 will also no longer be available for enforcement of uncontested UK judgments in Ireland, or Irish judgments in the UK.

To issue Irish proceedings against a UK-based defendant, it will be necessary to apply under Order 11 RSC (Rules of the Superior Court) for leave to issue and serve proceedings out of the jurisdiction. The court will have to be satisfied that the matter is one over which the Irish courts should exercise jurisdiction on the basis that the cause of action fits within one of the categories exhaustively listed in Order 11, Rule 1.

When seeking to enforce a UK judgment in Ireland, a plaintiff will have to commence fresh proceedings (e.g. by summary summons where one has judgment for a liquidated sum) so as to turn it into an Irish judgment.

The adverse effects of Brexit could be mitigated if the UK is admitted in its own right to the Lugano Convention. Brussels Recast evolved from the Brussels Convention of 1968. The Lugano Convention 1988 (replaced with an updated version in 2007), adopted the principles set out in the Brussels Convention and extended them to three of the states of the European Free Trade Association (EFTA) – Iceland, Norway and Switzerland.

In April 2020, the UK applied to participate in the Lugano Convention in its own right. This would ensure that most of the same principles covering jurisdiction and the recognition and enforcement of judgments under Brussels Recast would continue to apply in future. Iceland, Norway, and Switzerland have agreed to welcome the UK into the Lugano Convention, but at the time of writing, the EU has not agreed to do so. A three-month notice period for admission of new members means the UK will not be joining Lugano on 1 January 2021, although it may be admitted later.

Although the Lugano Convention is similar to Brussels Recast, there are certain key differences. The 2007 Convention was modelled on EC Regulation 44 / 2001, so it is now somewhat out of date. For example, Article 38 of the Lugano Convention still requires a party seeking to enforce a judgment in a second state, to obtain a declaration of enforceability in that second state, whereas this requirement has been abolished in

Eoin Martin BL practises in the area of commercial, chancery and insolvency law. He was called to the Bar in 2011

Brussels Recast. European Enforcement Orders also do not extent to Lugano Convention states.

Brussels Recast had stronger provisions than Lugano to deal with exclusive jurisdiction clauses and the “Italian torpedo” problem. Under Brussels Recast, Article 31(2) provides that unless and until the court specified in the choice of jurisdiction clause decides that it does not have jurisdiction, a court in any other jurisdiction must stay proceedings commenced before it. Under Lugano, the court first seised of proceedings must rule on jurisdiction before any other courts do so, which can facilitate deliberate efforts to frustrate such clauses.

The interpretation of the Lugano Convention by the Court of Justice of the European Union is not binding on non-EU states, so there is some risk that a divergence could open between UK jurisprudence and that of the CJEU.

The UK recently ratified the Hague Choice of Court Convention 2005. This is limited in its scope compared to the Lugano Convention, but it means that the UK will recognise choice of jurisdiction clauses in contractual agreements. Foreign arbitral awards can be recognised and enforced under the New York Convention which has force of law in Ireland by virtue of section 24 and schedule 2 of the Arbitration Act 2010. The UK is also an existing signatory so this area may feel less of a Brexit impact.

Regulation (EC) 1393 / 2007 (“the Service Regulation”) governs service of legal proceedings in other EU member states. The Service Regulation largely mirrors the Hague Convention on the Service Abroad of Judicial and Extra-judicial Documents in Civil or Commercial Matters 1965. The Hague Service Convention provides for the same five methods of service as the Service Regulation, including the use of central transmitting and receiving agencies. The good news is that both Ireland the UK are parties to the Hague Service Convention in their own right (as distinct from merely as members of the EU), so the practical arrangements for service of Irish proceedings in the UK post-Brexit should remain largely the same, even if effected under a different legal instrument.

When serving documents abroad, it is mandatory to use one of the methods of service prescribed in the Service Regulation to ensure that an application for judgment in default of appearance is accepted. In Alder v. Orlowska, C-325/11, the CJEU described those modes of service as “exhaustive” with respect to cases falling within the scope of the Service Regulation.In Shiblaq v. Sadikoglu [2004] EWHC 1890 (Comm), the English High Court confirmed that the same principle applies to the Hague Convention. In the recent Irish case of Grovit v. Jansen [2018] IEHC 22, Binchy J. found that service abroad by litigants themselves using registered post is not permissible, although transmitting agencies can use that method on litigants’ behalf.

Council Regulation (EC) 1206 / 2001 (“the Evidence Regulation”) provides for streamlined The good news is that both Ireland the UK are parties to the Hague Service Convention in their own right, so the practical arrangements for service of Irish proceedings in the UK postBrexit should remain largely the same

Article 67 of the Withdrawal Agreement between the EU and the UK provides that in respect of legal proceedings instituted before the end of the transition period, Brussels Recast will continue to apply

methods for litigants in one EU member state to request the taking of evidence in another member state. Essentially, the Evidence Regulation allows courts in one member state to directly request a court in another member state to take evidence on their behalf or to facilitate the requesting court in taking evidence directly in the requested state. This is done by use of a standardised request form which is transmitted to courts identified by each member state as being competent to receive requests to take evidence.

In the same way as the Service Regulation mirrors the Hague Service Convention, so too does the Evidence Regulation mirror the Hague Evidence Convention. Unfortunately, Ireland is not a party to the Hague Evidence Convention, although the UK is, so there is liable to be disruption in the way evidence is requested from the UK for Irish proceedings, or vice versa.

To obtain evidence in Ireland for use in UK proceedings, parties will have to invoke the Foreign Tribunals Evidence Act 1856. The procedure for receiving foreign requests is governed by Order 39, Rules 39-44 RSC. Requests can be received by the Department of Foreign Affairs and transmitted to the Chief State Solicitor. Alternatively, a foreign litigant may apply ex parte grounded on affidavit to the High Court to give effect to a request from a foreign court.

Where evidence is sought abroad for Irish proceedings, Order 39, Rule 5(2) RSC sets out the process for a party to Irish litigation to apply to the Court to issue a request to a foreign court to take evidence for the purposes of the Irish proceedings. Alternatively, the Irish Court may order the taking of evidence on commission under Order 39, Rule 1 but this is not useful where the witness needs to be compelled.

Regulation (EU) 848 / 2015 (“the Insolvency Regulation”) governs the jurisdiction in which insolvency proceedings against individuals or companies should be opened, based on an identification of the debtor’s centre of main interests (COMI). It also provides for the opening of secondary proceedings in another jurisdiction in which the debtor has an “establishment”.

Despite being outside its scope, it seems likely that the UK will continue to apply many of the principles embodied in the Insolvency Regulation anyway (such as the test to identify COMI). However, mechanisms for the coordination of secondary proceedings with main proceedings will be lost. Irish Courts have however recognised the principle that a bankruptcy order made abroad should have universal effect, in order to ensure the fair treatment of all creditors and the effective recovery of assets. In Re Drumm (a bankrupt)[2010] IEHC 546 for example, Dunne J. was willing to approve an application by an American trustee in bankruptcy for assistance in getting his assets in Ireland.

Section 142 of the Bankruptcy Act 1988 makes provision for the Irish Courts to act in aid of other courts overseas in any bankruptcy matter. Currently, this provision only applies to the Isle of Man and the Channel Islands. However, as originally enacted, it also applied to the courts of Northern Ireland, England & Wales, and Scotland. The application to these countries was removed in 2002, as it was superfluous in light of the introduction of the Insolvency Regulation. This provision could potentially be restored to provide an express statutory basis in Irish law for aiding UK insolvencies.

The Rome I Regulation applicable to contractual relations, and the Rome II Regulation applicable to non-contractual relations, create a common system for determining conflicts of law, as distinct from conflicts of jurisdiction. The UK government has indicated its willingness to maintain these regimes as part of UK domestic law after the end of the transition period. Because formal reciprocity between jurisdictions is not necessary to give effect to these regimes, upheaval on this front will hopefully be minimal for the foreseeable future.

Article 67 of the Withdrawal Agreement between the EU and the UK provides that in respect of legal proceedings instituted before the end of the transition period, Brussels Recast will continue to apply. Similarly, Brussels Recast shall apply to the recognition and enforcement of judgments given in legal proceedings instituted before the end of the transition period, and to authentic instruments formally drawn up or registered and court settlements approved or concluded before the end of the transition period. The Insolvency Regulation shall also apply to insolvency proceedings provided that the main proceedings were opened before the end of the transition period.

Article 68 provides that the Service and Evidence Regulations will continue to apply where requests for service or for evidence to be obtained were received before the end of the transition period. Article 66 provides that the Rome Regulations will continue to apply to contracts concluded or causes of action accrued before the end of the transition period.