Enforceability of UK judgments in the event of a No Deal Brexit: A worrying development

05 Feb 2019 | 6 min read

Angharad Parry of 20 Essex Street considers the Notice to Stakeholders dated 18 January 2019, entitled ‘Withdrawal of the United Kingdom and EU Rules in the field of Civil Jurisdiction and Private International Law’ and its implications for practitioners seeking to enforce UK judgments in the remaining EU 27 after the UK leaves the EU.

On 18 January 2019, the EU published the Notice to Stakeholders on 18 January 2019, entitled ‘Withdrawal of the United Kingdom and EU Rules in the field of Civil Jurisdiction and Private International Law’ (the Notice) which replaces the previous Notice to Stakeholders of 21 November 2017.

The Notice highlights particular consequences of EU rules on private international law no longer being applicable to the UK. It is subject to the transition period as set out in the Withdrawal Agreement. However, in the event of a No Deal Brexit, it is understood that these highlighted issues would be immediately relevant.

The provisions in the Notice dealing with the recognition and enforcement of judgments are set out in para 2:

Paragraph 2.1 states ‘Where the relevant instrument foresees exequatur,’ and the judgment has been exequatured before the Withdrawal Date, but not yet enforced before that date, it can still be enforced in the EU 27. Paragraph 2.1 does not stipulate which are the ‘relevant instruments’ to which it refers.

Paragraph 2.2 then goes on to state that, absent exequatur before the Withdrawal Date, a judgment of the UK courts will not be subject to EU recognition and enforcement regime even if the judgment was rendered prior to the Withdrawal Date, and even if enforcement proceedings were commenced before the Withdrawal Date. There is no saving provision in Para 2.2 for instruments which do not foresee exequatur.

Paragraph 2.3 provides that national rules on recognition and enforcement will apply to proceedings instituted on or after Withdrawal Date. It also advises that there may be instances in which other international conventions may be relevant.

Regulation (EU) 1215/2012, Brussels I (recast) is not an instrument that foresees exequatur. On the contrary, Article 53 of Regulation (EU) 1215/2012, Brussels I (recast) foresees a certification process that is not exequatur. Indeed, the regulation is commonly referred to as having removed the need for exequatur. Therefore, judgments should not fall within para 2.1 of the Notice.

Paragraph 2 does not therefore stipulate in clear terms what should happen to UK judgments rendered pursuant to Regulation (EU) 1215/2012, Brussels I (recast)—which will surely encompass a large proportion of current judgments sought to be enforced in the EU27. The literal wording of Para 2.2 requires exequatur, and taken literally, this provision would mean that UK judgments rendered under the Regulation (EU) 1215/2012, Brussels I (recast) would only be enforceable pursuant to national laws or other private international law convention, unless they had been exequatured before Withdrawal Date. Such judgments would not have been exequatured before Withdrawal Date (or at all) as the Regulation (EU) 1215/2012, Brussels I (recast) itself stipulates for a different certification regime.

This creates a most alarming situation for those seeking to enforce UK judgments rendered prior to Withdrawal Date but not yet enforced. Taken literally, Para 2 suggests that such judgments will, in the event of No Deal, be significantly more difficult to enforce. Although the scope of enforceability at a local national level is outside this analysis it is predicted to be significantly less advantageous for UK judgment holders than the current regime.

The literal interpretation of Para 2 is extremely surprising. It is out of keeping with Para 1.1 of the Notice, which allows for pending proceedings as of the Withdrawal Date to continue under EU rules of private international law.

Further, this interpretation creates an absurdity whereby judgments under older regimes eg. Brussels I, would be potentially enforceable if exequatured, but more recent judgments would not be.

Parties are also left in a seemingly impossible position: they are seemingly expected to apply for exequatur, when such is specifically not provided for in Regulation (EU) 1215/2012, Brussels I (recast). Thus parties are left finding that the rules have changed mid-game, and that they are expected to take a step before Withdrawal Date that is expressly not provided for by the regime prevalent until that date.

It is possible that Para 2.2 is an instance of unfortunate drafting, and that Para 2.2 is meant to be limited to judgments arising from the instruments referred in Para 2.1 which foresee exequatur. It may be that it has been stated over-categorically, and that readers are meant to ‘read in’ that instruments not requiring exequatur are to be treated differently. However, that is not what the Notice says in terms. Further, it is striking that no provision is made for instruments not requiring exequatur.

It is also possible that other interpretations could be proffered eg. that exequatur is being used broadly to refer to any certification process.

Whatever the explanation for this, it leaves parties seeking to enforce current UK judgments rendered under the Regulation (EU) 1215/2012, Brussels I (recast) in a most difficult position. What should they now do? How can they protect the judgment ‘assets’ and mitigate the risks which may arise from No Deal Brexit? Parties already in the process of enforcement will have already spent costs enforcing under one regime, and may find that these costs have been wasted if in fact a judgment will no longer be enforceable under EU rules absent exequatur.

It is almost inevitable that, regardless of the correct interpretation, that parties in EU27 countries will seek to take advantage of Para 2 in attempts to resist enforcement of UK judgments in the event of No Deal Brexit.

Legal practitioners are also left with a most unsatisfactory situation as to what to advise their clients to do. Currently, lawyers will have to advise of the risk posed to enforceability by Para 2 of this Notice, in the event of No Deal. Lawyers should also seek advice from correspondent lawyers in the EU27 jurisdiction where enforcement is desired to find out

•    how they understand this Notice, and how they suggest risk to enforceability is minimized, and

•     how recognition and enforcement could be achieved under local national law in the event of No Deal Brexit

It is most unsatisfactory for parties, and their legal advisers, to be left in such a position of uncertainty. Clarification of this Notice from appropriate sources would be welcomed.

Filed Under: Brexit

Area of Interest