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New law: Changes to the way legal rulings are recognised and enforced now that the UK has left the EU

Author: Atom Content Marketing

Published: 01 Jul 2021

UK businesses and individuals that may end up in legal disputes with businesses or individuals in an EU country – such as customers, suppliers, commercial partners, etc - should consider the impact on them of Brexit-related changes to the way legal decisions made by the courts in such disputes are recognised and can be enforced.

Previously, EU rules applied to the UK, whereby other EU member states recognised and enforced UK court decisions, and vice versa. However, those rules no longer apply automatically to the UK because it is no longer an EU member state.

If the UK became a party to a treaty called the Lugano Convention, the EU (and other parties to it) would continue to recognise and enforce UK decisions in a similar way to before. However, the UK can only become a party to the Convention if the existing parties agree, and the EU Commission has indicated that it will not agree to the UK becoming a party.

If the UK does not become a party to the Lugano Convention, recognition and enforcement of legal rulings may depend on:

  • What any contracts say about which courts have jurisdiction if a dispute arises. For example, whether contracts say disputes will be decided in the courts in England and Wales or somewhere else.
  • If England and Wales courts have jurisdiction, whether their decisions will be recognised and enforceable in other relevant countries, for example where the other side has assets. A court ruling is more likely to be enforceable if the contract gives the English courts exclusive jurisdiction.
  • Whether the contract requires the other side to appoint someone in England and Wales to accept legal documents on their behalf if a dispute arises.

Operative date

  • Now

Recommendations

  • UK businesses and individuals doing business or dealing with overseas customers should review existing agreements to see which courts have jurisdiction and how enforceable any court decisions are likely to be.
  • Consider whether you can go to arbitration rather than court to resolve any disputes. The rules governing arbitration are not affected by the UK leaving the EU.
Disclaimer

This article from Atom Content Marketing is for general guidance only, for businesses in the United Kingdom governed by the laws of England. Atom Content Marketing, expert contributors and ICAEW (as distributor) disclaim all liability for any errors or omissions.

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About Legal Alert

Legal Alert is a monthly checklist from Atom Content Marketing highlighting new and pending laws, regulations, codes of practice and rulings that could have an impact on your business.