-
England
Brexit | Jurisdiction and enforcement – What you need to know
27 January 2021
- Contracts
- Litigation
Summary
The recent post-Brexit trade deal makes no provision for jurisdiction or the enforcement of judgments.
Therefore, the UK dropped out of the jurisdiction of the Brussels (Recast) Regulation (No. 1215/2012) on 31 December 2020.
The EU has not yet approved the UK’s accession to the Lugano Convention, but may do in the future.
Unless the transitional provisions from the Withdrawal Agreement apply, jurisdiction and enforcement of judgments will be governed by the Hague Convention 2005 if there is an applicable exclusive jurisdiction clause
If the Hague Convention of 2005 does not apply, then the UK and EU courts will apply their own national rules.
Judgments will continue to be reciprocally enforceable between the UK and Norway from 1 January 2021.
On the first day of 2021 the UK left the EU regimes with which European lawyers are familiar. We appeared to enter “uncharted territory”. Not so. In fact, there are charts for this territory – or maps, to use a more modern word. You just need to know which maps.
Whether you are a lawyer or a businessperson, in whatever country, you need answers to two questions. Which laws govern jurisdiction and enforcement of judgments between EU member states and the UK; and how should businesses act as a result?
What happened?
The EU and UK reached a post-Brexit trade deal, the Trade and Cooperation Agreement (“TCA”), on Christmas Eve 2020. The provisions of the TCA became UK law as the European Union (Future Relationship) Act on 31 December 2020. The TCA made provision for judicial cooperation in criminal matters, but did not mention judicial cooperation in civil matters, or jurisdiction and enforcement of judgments in civil and commercial proceedings.
So where do we look for law on those matters?
We look at the position immediately before Brexit. As every lawyer should know the Brussels (Recast) Regulation (No. 1215/2012) governed the enforcement and recognition of judgments between EU member states.
Also, the Lugano Convention 2007 governs jurisdiction and enforcement of judgments in commercial and civil matters between EU member states and Iceland, Liechtenstein, Norway and Switzerland. It operates in substantially the same way as Brussels (Recast) does between EU member states.
The UK was party to the Convention by virtue of its EU membership. Now that the UK is not a member of the EU, the contracting parties could agree that the UK could join the Lugano Convention as an independent contracting party, and there would be little change to the position on jurisdiction and enforcement. English jurisdiction clauses would continue to be respected and English court judgments would continue to be readily enforceable throughout EU member states and EFTA countries, and vice versa.
The problem is that the EU has not agreed to the UK joining the Lugano Convention
The UK submitted its application to accede to the Lugano Convention in its own right on 8 April 2020. But accession requires the consent of all contracting parties including the EU. Iceland, Norway and Switzerland have indicated their support for the UK’s accession, but the EU’s position is still not yet clear and the TCA is silent on this matter.
While the EU still may belatedly support the UK’s accession to Lugano, it does not currently apply. In any case, a three-month time-lag applies between agreement and entry into force, unless all the contracting parties agree to waive it.
Where are we now?
If the transitional provisions provided for by the Withdrawal Agreement as explained in my previous post do not apply, the Brussels (Recast) Regulation will not apply to jurisdiction and enforcement between the EU and UK.
If they do not, then you first need to decide whether the Hague Convention on Choice of Court Agreements 2005 is applicable. The Hague Convention 2005 applies between EU Member States, Mexico, Singapore and Montenegro. The Hague Convention first came into force for the UK when the EU acceded on 1 October 2015 and the UK re-acceded after Brexit in its own right with effect from 1 January 2021.
The Hague Convention 2005 applies if:
- The dispute falls within the scope of the Convention as provided for by Article 2 – e.g. the Convention does not apply to employment and consumer contracts or claims for personal injury;
- There is an exclusive jurisdiction clause within the meaning of Article 3; and
- The exclusive jurisdiction clause is entered into after the Convention came into force for the country whose courts are seized, and proceedings are commenced after the Convention came into force for the country whose courts are seized within the meaning of Article 16.
There is some uncertainty as to whether EU member states will treat the Hague Convention as having been in force from 1 October 2015, or only from when the UK re-accedes on 1 January 2021. The UK’s view is that the Convention will apply to the UK from 1 October 2015; the EU’s view is that it will apply to the UK from 1 January 2021. What is not in dispute is that for exclusive English jurisdiction clauses agreed on or after 1 January 2021, the contracting states will respect exclusive English jurisdiction clauses and enforce the resulting judgments.
If the 2005 Hague Convention does not apply, then the UK and EU courts will apply their own national rules to questions of jurisdiction and enforcement. In the UK, the rules will essentially be the same as the ‘common-law’ rules currently on enforcement applied to non-EU parties, for example the United States.
The Norwegian exception
The UK and Norway have reached an agreement which extends and updates an old mutual enforcement treaty, the 1961 Convention for the Reciprocal Recognition and Enforcement of Judgments in Civil Matters between the UK and Norway, which will apply if the UK does not re-accede to the Lugano Convention. The practical effect of this agreement is that judgments will continue to be reciprocally enforceable between the UK and Norway from 1 January 2021.
How should your business act now?
The applicable legal framework for each dispute will depend on the facts of each case. You should review the dispute resolution clauses in your cross-border contracts to assess how they may be affected by Brexit and to seek specialist advice where necessary. You should also seek advice on dispute resolution provisions when entering into new cross-border contracts in 2021.
Brexit had surprised nations all over the world. It is now confusing lawyers all over the world whose clients are engaged in contracts or disputes with English choice of law or jurisdiction clauses.
Should they advise their clients to continue to choose English law, jurisdiction or arbitral seats in new contracts? Should they litigate or arbitrate under choices they made in existing contracts before anyone dreamed of Brexit; or does Brexit mean the recognition and enforcement of judgments or awards may be problematic?
The United Kingdom finally left the European Union on 31 January 2020. Little in the world of enforcement and recognition has changed to date. However, the UK is due to drop out of the EU regimes with which European lawyers are familiar on 31 December 2020. From then, we will enter unchartered territory.
This first blog explores the legal framework the UK and EU politicians agreed in 2019 to carry us through to the end of 2020 and what that framework tells us about the changes to enforcement and recognition of judgments from the beginning of 2021.
What is the Withdrawal Agreement and the Withdrawal Agreement Act?
The Withdrawal Agreement is a treaty between the EU and the UK which was agreed on 17 October 2019 as a result of Brexit negotiations. The purpose of the Withdrawal Agreement is to establish the terms of the UK’s withdrawal from the EU, including what happens to jurisdiction and enforcement of judgments as between the UK and the EU.
The European (Withdrawal Agreement) Act 2020 is an Act of UK Parliament. The purpose of the Withdrawal Agreement Act is to enshrine and implement the provisions of the Withdrawal Agreement into the domestic law of the UK. Having been given Royal Assent on 23 January 2020 and ratified by the Council of the European Union on 30 January 2020, the Withdrawal Agreement Act came into force on 31 January 2020.
What is the transition period?
The Withdrawal Agreement provides for a transition period to give businesses time to adjust to the new situation and time for the UK and EU governments to negotiate new trade, travel, business and legal arrangements.
How then does the Withdrawal Agreement affect the jurisdiction and enforcement of judgments between the UK and EU during the transition period and when is the transition period to and from?
The transition period commenced on 31 January 2020 and will end on 31 December 2020, as provided for by Article 126 of the Withdrawal Agreement.
Article 132 of the Withdrawal Agreement also provides that the transition period may be extended for up to one or two years by a one-off decision made before 1 July 2020 by the joint UK-EU Committee. Although, such an extension is effectively ruled out by section 33 of the Withdrawal Agreement Act. This prohibition could be overridden by further legislation; the possibility of which is perhaps more real given the global effects of the coronavirus pandemic. However, as it stands, the default position is that the transition period will end on 31 December 2020.
What is the effect on jurisdiction and enforcement of judgments during the transition period?
There are four key provisions of the Withdrawal Agreement which affect jurisdiction and enforcement of judgments:
- Article 127 provides that EU law will apply to and in the UK during the transition period, unless otherwise provided in the Withdrawal Agreement, and any reference to Member States in EU law will be understood as including the UK.
- Article 129 provides that the UK will also continue to comply and be bound by obligations stemming from international agreements to which the EU is party during the transition period.
- Article 67(1) provides that in the UK, as well as in the Member States in situations involving the UK, the Brussels (Recast) Regulation (No. 1215/2012) (“Brussels Recast”) will apply to:
- “legal proceedings instituted before the end of the transition period”; and
- “legal proceedings or actions” which although themselves are not instituted before the end of the transition period “are related to such legal proceedings pursuant to Articles 29 to 31 of the Brussels Recast Regulation”. Articles 29 to 31 of Brussels Recast concern the rules on lis pendens and related actions.
- Article 67(2) provides that in the UK, as well as in the Member States in situations involving the UK, Brussels Recast will apply to “to the recognition and enforcement of judgments given in legal proceedings instituted before the end of the transition period.”
Practically, the effect of these provisions is as follows:
- The rules on jurisdiction and recognition and enforcement of judgments between the UK and other EU Member States will continue to be governed by Brussels Recast during the transition period.
- The courts in the UK and EU Member States in situations involving the UK will continue to apply Brussels Recast to determine jurisdiction, provided the proceedings are issued before 31 December 2020 or they are related to such proceedings.
- The courts in the UK and EU Members States in situations involving the UK will also continue to apply Brussels Recast to recognise and enforce their respective judgments, provided proceedings are issued before 31 December 2020.
- The UK will continue to comply and be bound by obligations stemming from international agreements relating to jurisdiction and enforcement of judgments to which the EU is party during the transition period. This includes the Hague Convention on Choice of Court Agreements 2005 and the Lugano Convention 2007.
- The Hague Convention 2005 applies between EU Member States, Mexico, Singapore and Montenegro. The UK is currently party to the Hague Convention by virtue of its EU membership, however, that will cease at the end of the transition period. Whether the Hague Convention will continue to apply as between the UK and other Contracting states after the end of the transition period is covered in my next Brexit blog post – ultimately, it depends on whether the UK joins the Hague Convention in its own right.
- The Lugano Convention 2007 applies between EU Member States and EFTA countries Iceland, Norway and Switzerland. Again, the UK is currently party to the Lugano Convention by virtue of its EU membership, however, that will cease at the end of the transition period. The applicability of the Lugano Convention between the UK and other Contracting States after the end of the transition period is also covered in my next Brexit blog post.
Before the end of the transition period, commercial parties should review dispute resolution clauses in their contracts to assess whether the clause’s intended utility will be affected by Brexit. If parties are engaged in current disputes, they should consider whether it is appropriate to issue proceedings before 31 December 2020 in order to benefit from the ongoing application of the existing framework of the rules governing jurisdiction and enforcement, in particular, Brussels Recast.
The English common law is a primary choice of law for international business, because it consistently gives the parties exactly what they agreed: what you see in the contract is what you get.
The same cannot be said for the English legal system: there are barristers, solicitors, Inns of Court, chambers, compulsory disclosure, cross-examination and the loser pays rule. There is much to confuse non-English lawyers and mistakes can be expensive for their clients. Those who know enough to avoid confusion can add real value for clients who have English law disputes.
This blog focuses on a single feature which is key for international lawyers’ understanding of the English legal system: why it has two kinds of lawyer – barristers and solicitors – and what each of them does.
Barristers and solicitors: what is the difference?
To understand the difference, the key thing to bear in mind is that they run completely different business models to support their legal practices.
Solicitors practice within law firms: profit sharing entities, familiar to lawyers around the world. This risk-sharing model allows senior lawyers to employ teams of junior lawyers to do the heavy lifting on cases: corresponding with the client, the court and the opposing parties and collecting the evidence for trial.
Barristers are self-employed individuals. They operate from ‘chambers’, which are cost-sharing organisations; barristers practising in chambers together do not share profit or spread risk. They cannot employ junior lawyers to do the heavy lifting on cases; they do not collect evidence, correspond with the court, opposing party or the client. Instead, they are specialist sub-contractors to law firms in England and around the world. Those law firms do all that heavy lifting that allows barristers to conduct their practices.
What barristers do
What, then, do law firms ask them to do? Two things: to provide advocacy services and the detailed legal advice necessary for effective advocacy. That means they have particular familiarity with three key aspects of English dispute resolution:
- the detail of the cases which are the source of the common law,
- the cross-examination of witnesses; and
- the oral and written judicial argument that pulls the first two aspects together.
But aren’t those the fun bits of being a lawyer? Well, yes. So why would a law firm outsource the fun bits? Well, that depends on the kind of law firm…
English solicitors’ reasons for using barristers
Let’s take English solicitors first. You have to bear in mind two characteristics of common law dispute resolution. The first has already been mentioned: the source of law is not a readily-comprehensible, unifying civil code, but thousands of cases decided over centuries; it takes time to master the case law in sufficient detail to argue cases.
The second is the nature of hearings: they take time because of the detailed case law that needs to be considered and because a great deal of work is done orally: from argument to the cross-examination of witnesses. Trials are all-consuming and can last months. So the nature of common law trial work means you have to focus all your time and attention on it to succeed.
That gives the English law firm a choice: it can either recruit and manage expensive, in-house advocacy talent, or it can outsource it. The former is capital-intensive and risky. The latter involves no capital and no risk. You might object that risk is necessary for reward; and true it is. But the existence of a ready supply of barristers in England means solicitors do not have to take that particular business risk in addition to all the other risks they have to take in order to run successful disputes practices.
The existence of barristers allows solicitors to make the following calculation: few cases come to trial; most settle. Solicitors make most of their income preparing cases for trial, not in trial. So it is less risky and more profitable to recruit junior lawyers to help prepare cases for trial rather than recruit senior advocates to fight trials. If the trial happens, solicitors retain a barrister as advocate in the case; they make just enough of the barrister before trial to ensure the trial will run smoothly if it does happen. Meanwhile, the senior solicitors focus on managing their teams of lawyers and winning new business to keep their practices growing. It is an effective business model, even if it leaves the fun bits to barristers.
The risk-reduction that barristers offer to solicitors is more extensive than that basic analysis allows. First, solicitors do not take the risk of losing a client by instructing a barrister on their cases; the barrister’s clients are law firms: no risk there. Second, a firm’s choice to recruit in house advocates is a choice taken once and once only, for better or worse. By contrast, a firm’s choice to instruct a barrister is taken on each new case, so it can choose an advocate with precisely the right expertise for the case. That means the firm can sell its trial preparation practice to assist in disputes in which the firm itself lacks specialist expertise. That reduces the firm’s risk and maintains its profitability.
All in all, therefore, barristers’ and solicitors’ different business models allow them to run complimentary, not competitive practices.
Non-English lawyers’ reasons to use barristers
Now let us consider why non-English law firms would use barristers. The answer is: for the same reasons, but more so. Many non-English law firms have clients with disputes under English law. Most feel the need to pass those cases on to an English law firm; if they do, they lose all or almost all the revenue from the case. To the extent they stay involved, they have little control over the process or the outcome, but they do have the unenviable task of handing the English firm’s very large invoices to their client. It is rarely a comfortable experience.
Note, however: the more sophisticated non-English law firms engage a barrister as their own sub-contractor on English law cases. That completely changes their experience of conducting English law disputes.
In arbitrations, the non-English law firm is free to do exactly the same job an English solicitor; the sub-contracted barrister provides the English law advice and advocacy that the law firm itself cannot provide. By stepping into the shoes of the English law firm, the non-English firm both reduces its client’s legal costs and takes a larger share of them.
In litigation, the non-English law firms must engage a solicitor, but the sophisticated firm nevertheless engages a barrister as its own sub-contractor, rather than allowing the solicitor to engage the barrister. That gives the non-English firm a better flow of information and greater control over the process, so it can better manage its client’s expectations and liabilities.
So: sophisticated non-English law firms do not let the English law firms reap all the competitive advantages barristers offer to law firms; they take those advantages for themselves. Your firm should do so too. Be sophisticated: develop trusted relations with an internationally-minded barrister today; it will be invaluable when your client is involved in a dispute under English law.
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- Contracts
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Contact Richard
Brexit – Jurisdiction and Enforcement of Judgments during the Transition Period
10 October 2020
-
England
- Litigation
Summary
The recent post-Brexit trade deal makes no provision for jurisdiction or the enforcement of judgments.
Therefore, the UK dropped out of the jurisdiction of the Brussels (Recast) Regulation (No. 1215/2012) on 31 December 2020.
The EU has not yet approved the UK’s accession to the Lugano Convention, but may do in the future.
Unless the transitional provisions from the Withdrawal Agreement apply, jurisdiction and enforcement of judgments will be governed by the Hague Convention 2005 if there is an applicable exclusive jurisdiction clause
If the Hague Convention of 2005 does not apply, then the UK and EU courts will apply their own national rules.
Judgments will continue to be reciprocally enforceable between the UK and Norway from 1 January 2021.
On the first day of 2021 the UK left the EU regimes with which European lawyers are familiar. We appeared to enter “uncharted territory”. Not so. In fact, there are charts for this territory – or maps, to use a more modern word. You just need to know which maps.
Whether you are a lawyer or a businessperson, in whatever country, you need answers to two questions. Which laws govern jurisdiction and enforcement of judgments between EU member states and the UK; and how should businesses act as a result?
What happened?
The EU and UK reached a post-Brexit trade deal, the Trade and Cooperation Agreement (“TCA”), on Christmas Eve 2020. The provisions of the TCA became UK law as the European Union (Future Relationship) Act on 31 December 2020. The TCA made provision for judicial cooperation in criminal matters, but did not mention judicial cooperation in civil matters, or jurisdiction and enforcement of judgments in civil and commercial proceedings.
So where do we look for law on those matters?
We look at the position immediately before Brexit. As every lawyer should know the Brussels (Recast) Regulation (No. 1215/2012) governed the enforcement and recognition of judgments between EU member states.
Also, the Lugano Convention 2007 governs jurisdiction and enforcement of judgments in commercial and civil matters between EU member states and Iceland, Liechtenstein, Norway and Switzerland. It operates in substantially the same way as Brussels (Recast) does between EU member states.
The UK was party to the Convention by virtue of its EU membership. Now that the UK is not a member of the EU, the contracting parties could agree that the UK could join the Lugano Convention as an independent contracting party, and there would be little change to the position on jurisdiction and enforcement. English jurisdiction clauses would continue to be respected and English court judgments would continue to be readily enforceable throughout EU member states and EFTA countries, and vice versa.
The problem is that the EU has not agreed to the UK joining the Lugano Convention
The UK submitted its application to accede to the Lugano Convention in its own right on 8 April 2020. But accession requires the consent of all contracting parties including the EU. Iceland, Norway and Switzerland have indicated their support for the UK’s accession, but the EU’s position is still not yet clear and the TCA is silent on this matter.
While the EU still may belatedly support the UK’s accession to Lugano, it does not currently apply. In any case, a three-month time-lag applies between agreement and entry into force, unless all the contracting parties agree to waive it.
Where are we now?
If the transitional provisions provided for by the Withdrawal Agreement as explained in my previous post do not apply, the Brussels (Recast) Regulation will not apply to jurisdiction and enforcement between the EU and UK.
If they do not, then you first need to decide whether the Hague Convention on Choice of Court Agreements 2005 is applicable. The Hague Convention 2005 applies between EU Member States, Mexico, Singapore and Montenegro. The Hague Convention first came into force for the UK when the EU acceded on 1 October 2015 and the UK re-acceded after Brexit in its own right with effect from 1 January 2021.
The Hague Convention 2005 applies if:
- The dispute falls within the scope of the Convention as provided for by Article 2 – e.g. the Convention does not apply to employment and consumer contracts or claims for personal injury;
- There is an exclusive jurisdiction clause within the meaning of Article 3; and
- The exclusive jurisdiction clause is entered into after the Convention came into force for the country whose courts are seized, and proceedings are commenced after the Convention came into force for the country whose courts are seized within the meaning of Article 16.
There is some uncertainty as to whether EU member states will treat the Hague Convention as having been in force from 1 October 2015, or only from when the UK re-accedes on 1 January 2021. The UK’s view is that the Convention will apply to the UK from 1 October 2015; the EU’s view is that it will apply to the UK from 1 January 2021. What is not in dispute is that for exclusive English jurisdiction clauses agreed on or after 1 January 2021, the contracting states will respect exclusive English jurisdiction clauses and enforce the resulting judgments.
If the 2005 Hague Convention does not apply, then the UK and EU courts will apply their own national rules to questions of jurisdiction and enforcement. In the UK, the rules will essentially be the same as the ‘common-law’ rules currently on enforcement applied to non-EU parties, for example the United States.
The Norwegian exception
The UK and Norway have reached an agreement which extends and updates an old mutual enforcement treaty, the 1961 Convention for the Reciprocal Recognition and Enforcement of Judgments in Civil Matters between the UK and Norway, which will apply if the UK does not re-accede to the Lugano Convention. The practical effect of this agreement is that judgments will continue to be reciprocally enforceable between the UK and Norway from 1 January 2021.
How should your business act now?
The applicable legal framework for each dispute will depend on the facts of each case. You should review the dispute resolution clauses in your cross-border contracts to assess how they may be affected by Brexit and to seek specialist advice where necessary. You should also seek advice on dispute resolution provisions when entering into new cross-border contracts in 2021.
Brexit had surprised nations all over the world. It is now confusing lawyers all over the world whose clients are engaged in contracts or disputes with English choice of law or jurisdiction clauses.
Should they advise their clients to continue to choose English law, jurisdiction or arbitral seats in new contracts? Should they litigate or arbitrate under choices they made in existing contracts before anyone dreamed of Brexit; or does Brexit mean the recognition and enforcement of judgments or awards may be problematic?
The United Kingdom finally left the European Union on 31 January 2020. Little in the world of enforcement and recognition has changed to date. However, the UK is due to drop out of the EU regimes with which European lawyers are familiar on 31 December 2020. From then, we will enter unchartered territory.
This first blog explores the legal framework the UK and EU politicians agreed in 2019 to carry us through to the end of 2020 and what that framework tells us about the changes to enforcement and recognition of judgments from the beginning of 2021.
What is the Withdrawal Agreement and the Withdrawal Agreement Act?
The Withdrawal Agreement is a treaty between the EU and the UK which was agreed on 17 October 2019 as a result of Brexit negotiations. The purpose of the Withdrawal Agreement is to establish the terms of the UK’s withdrawal from the EU, including what happens to jurisdiction and enforcement of judgments as between the UK and the EU.
The European (Withdrawal Agreement) Act 2020 is an Act of UK Parliament. The purpose of the Withdrawal Agreement Act is to enshrine and implement the provisions of the Withdrawal Agreement into the domestic law of the UK. Having been given Royal Assent on 23 January 2020 and ratified by the Council of the European Union on 30 January 2020, the Withdrawal Agreement Act came into force on 31 January 2020.
What is the transition period?
The Withdrawal Agreement provides for a transition period to give businesses time to adjust to the new situation and time for the UK and EU governments to negotiate new trade, travel, business and legal arrangements.
How then does the Withdrawal Agreement affect the jurisdiction and enforcement of judgments between the UK and EU during the transition period and when is the transition period to and from?
The transition period commenced on 31 January 2020 and will end on 31 December 2020, as provided for by Article 126 of the Withdrawal Agreement.
Article 132 of the Withdrawal Agreement also provides that the transition period may be extended for up to one or two years by a one-off decision made before 1 July 2020 by the joint UK-EU Committee. Although, such an extension is effectively ruled out by section 33 of the Withdrawal Agreement Act. This prohibition could be overridden by further legislation; the possibility of which is perhaps more real given the global effects of the coronavirus pandemic. However, as it stands, the default position is that the transition period will end on 31 December 2020.
What is the effect on jurisdiction and enforcement of judgments during the transition period?
There are four key provisions of the Withdrawal Agreement which affect jurisdiction and enforcement of judgments:
- Article 127 provides that EU law will apply to and in the UK during the transition period, unless otherwise provided in the Withdrawal Agreement, and any reference to Member States in EU law will be understood as including the UK.
- Article 129 provides that the UK will also continue to comply and be bound by obligations stemming from international agreements to which the EU is party during the transition period.
- Article 67(1) provides that in the UK, as well as in the Member States in situations involving the UK, the Brussels (Recast) Regulation (No. 1215/2012) (“Brussels Recast”) will apply to:
- “legal proceedings instituted before the end of the transition period”; and
- “legal proceedings or actions” which although themselves are not instituted before the end of the transition period “are related to such legal proceedings pursuant to Articles 29 to 31 of the Brussels Recast Regulation”. Articles 29 to 31 of Brussels Recast concern the rules on lis pendens and related actions.
- Article 67(2) provides that in the UK, as well as in the Member States in situations involving the UK, Brussels Recast will apply to “to the recognition and enforcement of judgments given in legal proceedings instituted before the end of the transition period.”
Practically, the effect of these provisions is as follows:
- The rules on jurisdiction and recognition and enforcement of judgments between the UK and other EU Member States will continue to be governed by Brussels Recast during the transition period.
- The courts in the UK and EU Member States in situations involving the UK will continue to apply Brussels Recast to determine jurisdiction, provided the proceedings are issued before 31 December 2020 or they are related to such proceedings.
- The courts in the UK and EU Members States in situations involving the UK will also continue to apply Brussels Recast to recognise and enforce their respective judgments, provided proceedings are issued before 31 December 2020.
- The UK will continue to comply and be bound by obligations stemming from international agreements relating to jurisdiction and enforcement of judgments to which the EU is party during the transition period. This includes the Hague Convention on Choice of Court Agreements 2005 and the Lugano Convention 2007.
- The Hague Convention 2005 applies between EU Member States, Mexico, Singapore and Montenegro. The UK is currently party to the Hague Convention by virtue of its EU membership, however, that will cease at the end of the transition period. Whether the Hague Convention will continue to apply as between the UK and other Contracting states after the end of the transition period is covered in my next Brexit blog post – ultimately, it depends on whether the UK joins the Hague Convention in its own right.
- The Lugano Convention 2007 applies between EU Member States and EFTA countries Iceland, Norway and Switzerland. Again, the UK is currently party to the Lugano Convention by virtue of its EU membership, however, that will cease at the end of the transition period. The applicability of the Lugano Convention between the UK and other Contracting States after the end of the transition period is also covered in my next Brexit blog post.
Before the end of the transition period, commercial parties should review dispute resolution clauses in their contracts to assess whether the clause’s intended utility will be affected by Brexit. If parties are engaged in current disputes, they should consider whether it is appropriate to issue proceedings before 31 December 2020 in order to benefit from the ongoing application of the existing framework of the rules governing jurisdiction and enforcement, in particular, Brussels Recast.
The English common law is a primary choice of law for international business, because it consistently gives the parties exactly what they agreed: what you see in the contract is what you get.
The same cannot be said for the English legal system: there are barristers, solicitors, Inns of Court, chambers, compulsory disclosure, cross-examination and the loser pays rule. There is much to confuse non-English lawyers and mistakes can be expensive for their clients. Those who know enough to avoid confusion can add real value for clients who have English law disputes.
This blog focuses on a single feature which is key for international lawyers’ understanding of the English legal system: why it has two kinds of lawyer – barristers and solicitors – and what each of them does.
Barristers and solicitors: what is the difference?
To understand the difference, the key thing to bear in mind is that they run completely different business models to support their legal practices.
Solicitors practice within law firms: profit sharing entities, familiar to lawyers around the world. This risk-sharing model allows senior lawyers to employ teams of junior lawyers to do the heavy lifting on cases: corresponding with the client, the court and the opposing parties and collecting the evidence for trial.
Barristers are self-employed individuals. They operate from ‘chambers’, which are cost-sharing organisations; barristers practising in chambers together do not share profit or spread risk. They cannot employ junior lawyers to do the heavy lifting on cases; they do not collect evidence, correspond with the court, opposing party or the client. Instead, they are specialist sub-contractors to law firms in England and around the world. Those law firms do all that heavy lifting that allows barristers to conduct their practices.
What barristers do
What, then, do law firms ask them to do? Two things: to provide advocacy services and the detailed legal advice necessary for effective advocacy. That means they have particular familiarity with three key aspects of English dispute resolution:
- the detail of the cases which are the source of the common law,
- the cross-examination of witnesses; and
- the oral and written judicial argument that pulls the first two aspects together.
But aren’t those the fun bits of being a lawyer? Well, yes. So why would a law firm outsource the fun bits? Well, that depends on the kind of law firm…
English solicitors’ reasons for using barristers
Let’s take English solicitors first. You have to bear in mind two characteristics of common law dispute resolution. The first has already been mentioned: the source of law is not a readily-comprehensible, unifying civil code, but thousands of cases decided over centuries; it takes time to master the case law in sufficient detail to argue cases.
The second is the nature of hearings: they take time because of the detailed case law that needs to be considered and because a great deal of work is done orally: from argument to the cross-examination of witnesses. Trials are all-consuming and can last months. So the nature of common law trial work means you have to focus all your time and attention on it to succeed.
That gives the English law firm a choice: it can either recruit and manage expensive, in-house advocacy talent, or it can outsource it. The former is capital-intensive and risky. The latter involves no capital and no risk. You might object that risk is necessary for reward; and true it is. But the existence of a ready supply of barristers in England means solicitors do not have to take that particular business risk in addition to all the other risks they have to take in order to run successful disputes practices.
The existence of barristers allows solicitors to make the following calculation: few cases come to trial; most settle. Solicitors make most of their income preparing cases for trial, not in trial. So it is less risky and more profitable to recruit junior lawyers to help prepare cases for trial rather than recruit senior advocates to fight trials. If the trial happens, solicitors retain a barrister as advocate in the case; they make just enough of the barrister before trial to ensure the trial will run smoothly if it does happen. Meanwhile, the senior solicitors focus on managing their teams of lawyers and winning new business to keep their practices growing. It is an effective business model, even if it leaves the fun bits to barristers.
The risk-reduction that barristers offer to solicitors is more extensive than that basic analysis allows. First, solicitors do not take the risk of losing a client by instructing a barrister on their cases; the barrister’s clients are law firms: no risk there. Second, a firm’s choice to recruit in house advocates is a choice taken once and once only, for better or worse. By contrast, a firm’s choice to instruct a barrister is taken on each new case, so it can choose an advocate with precisely the right expertise for the case. That means the firm can sell its trial preparation practice to assist in disputes in which the firm itself lacks specialist expertise. That reduces the firm’s risk and maintains its profitability.
All in all, therefore, barristers’ and solicitors’ different business models allow them to run complimentary, not competitive practices.
Non-English lawyers’ reasons to use barristers
Now let us consider why non-English law firms would use barristers. The answer is: for the same reasons, but more so. Many non-English law firms have clients with disputes under English law. Most feel the need to pass those cases on to an English law firm; if they do, they lose all or almost all the revenue from the case. To the extent they stay involved, they have little control over the process or the outcome, but they do have the unenviable task of handing the English firm’s very large invoices to their client. It is rarely a comfortable experience.
Note, however: the more sophisticated non-English law firms engage a barrister as their own sub-contractor on English law cases. That completely changes their experience of conducting English law disputes.
In arbitrations, the non-English law firm is free to do exactly the same job an English solicitor; the sub-contracted barrister provides the English law advice and advocacy that the law firm itself cannot provide. By stepping into the shoes of the English law firm, the non-English firm both reduces its client’s legal costs and takes a larger share of them.
In litigation, the non-English law firms must engage a solicitor, but the sophisticated firm nevertheless engages a barrister as its own sub-contractor, rather than allowing the solicitor to engage the barrister. That gives the non-English firm a better flow of information and greater control over the process, so it can better manage its client’s expectations and liabilities.
So: sophisticated non-English law firms do not let the English law firms reap all the competitive advantages barristers offer to law firms; they take those advantages for themselves. Your firm should do so too. Be sophisticated: develop trusted relations with an internationally-minded barrister today; it will be invaluable when your client is involved in a dispute under English law.