Litigating with a UK entity post Brexit
The Brexit transition period expired on 31 December 2020. From 1 January 2021 new rules apply when dealing with UK entities regarding which courts have jurisdiction to deal with disputes; how any UK court judgment can be enforced in Ireland and how to serve UK entities with Irish legal proceedings. This article considers each of these matters in turn. It is worth noting that neither arbitration nor mediation are affected by Brexit and those processes will remain as they currently are, including the ability to enforce Arbitration Awards under the New York Convention on the Recognition and Enforcement of Arbitration Awards, to which the UK and Ireland are both parties.
Which courts have jurisdiction?
Up until 1 January 2021 the Brussels 1 Recast Regulation (Brussels Recast) determined which court had jurisdiction in a dispute arising between Irish and UK parties. Subject to some transitional arrangements (effectively for ongoing proceedings), Brussels Recast will no longer apply to disputes between Irish and UK entities.
Instead new proceedings in Ireland against a UK party will be governed by the Hague Convention on Choice of Court Agreements (Hague 2005) supplemented by the common law rules of each jurisdiction. Hague 2005 only applies to foreign judgments given on foot of an exclusive choice of court agreement, which falls within the scope of Hague 2005. Generally the choice of the contracting parties as to which jurisdiction should hear their disputes on a contract is accepted by both Irish and UK courts. As a result, where there is an exclusive jurisdiction clause in favour of the Irish or UK courts, that clause is likely to continue to be upheld whether proceedings are brought in the UK or in Ireland.
In the event that the agreement does not contain a jurisdiction clause, the court in which the proceedings were first brought will apply local common law rules to determine the issue. Common law rules will also determine matters that are excluded from the scope of Hague 2005, including consumer and employment contract disputes, personal injury claims, insolvency matters and family law disputes.
The UK will from 1 January 2021 be a party to Hague 2005 in its own right. The UK and EU have differing opinions as to whether a unilateral agreement qualifies as an “exclusive choice of court agreement”. UK case law suggests that there are “good arguments” that they do qualify, whereas the EU believes otherwise.
Hague 2005 applies to agreements containing jurisdiction clauses entered into after the Convention came into force in the relevant state. The EU and the UK disagree as to whether Hague 2005 will be treated as having entered into force in the UK in October 2015, (when it entered into force in the EU generally), or January 2021, (when it entered into force in the UK specifically). There is therefore some uncertainty as to whether the EU and its member states will treat an agreement with a UK entity entered into between October 2015 and January 2021 as falling within the scope of Hague 2005.
Prior to 1 January 2021 the UK was a member of the Lugano Convention through its EU membership. The Lugano Convention governs questions of jurisdiction and enforcement between EU member states and the European Free Trade Association countries (at present, Lichtenstein, Norway, Switzerland and Iceland).
In April 2020 the UK applied to accede to the Lugano Convention. The UK’s accession to the Lugano Convention would have largely preserved the status quo following the end of the transition period as its principles and processes mirror those set out in Brussels Recast. However, the EU has not yet approved the UK’s application.
The UK may secure agreement with the EU to re-joining Lugano as an independent party. If the UK did re-join Lugano this would have benefits for Irish litigants and bring some certainty in relation to the question of jurisdiction and enforcement in disputes between the UK and Ireland as it is a similar regime to Brussels Recast.
Enforcement of judgments
Cross-border enforcement of judgments between Ireland and the UK has until now also been governed by Brussels Recast. This provides for enforcement of judgments essentially 'as of right' between EU member states with no further analysis of the merits of the underlining judgment.
Because Brussels Recast will continue to apply in cases where proceedings were commenced in the UK before 11pm on 31 December 2020 the existing regime will continue to apply to the enforcement of judgments between the UK and Ireland for some time to come. Otherwise however Brussels Recast has ceased to apply to enforcement of judgments in UK proceedings issued since 1 January 2021.
For cases commenced after 1 January 2021 enforcement is governed by a combination of common law rules and Hague 2005. These rules do provide for enforcement of foreign judgments, both in the UK and Ireland, but the procedure is likely to be more costly and less straightforward than under Brussels Recast. It is also worth noting that Hague 2005 cannot be used to enforce interim remedies such as interim injunctions, and it contains wider grounds for refusing enforcement.
The common law rules both in Ireland and the UK permit enforcement of foreign judgments, but the requirements are narrower than under Brussels Recast. In both Ireland and England, for example, for a foreign judgment to be enforceable in common law: it must be for a sum of money, be final and conclusive and be given by a court of competent jurisdiction. Rather than a simplified enforcement application parties must commence fresh legal proceedings, essentially suing on the judgment as a debt. Furthermore there are wider grounds for refusing to recognise and enforce a foreign judgment than apply under Brussels Recast.
The UK will also cease to be party to a number of other international instruments as a result of its departure from the EU. These include the European Enforcement Order (EEO) regime, for the enforcement of uncontested – such as default – judgments across the EU, except in Denmark.
Service of proceedings on a UK entity post 1 January 2021
Serving proceedings on a company in the UK from Ireland was until 1 January 2021 governed by the EU Service Regulation. The EU Service Regulation set out the previous framework for service of proceedings between the UK and Ireland. Subject to some limited transitional arrangements, the Service Regulation will no longer apply to service on a UK entity from 1 January 2021.
Instead, service of court proceedings between the UK and Ireland from 1 January 2021 will take place under the Hague Service Convention. In many cases this will be similar to the EU Service Regulation, but there are differences.
The process of service under the Hague Service Convention generally involves a central authority, for example the Master of the High Court in Ireland or the Foreign Process Department at the High Court in England. While this is a well-established process, in many cases it will be simplest and quickest to be able to serve on a suitable agent within the jurisdiction where the proceedings are started; so, for example, to serve Irish proceedings on solicitors in Ireland who have been authorised by UK defendants to accept service.
Irish parties entering into new contracts with a UK entity should when drafting and negotiating these contracts carefully consider the inclusion of specific service arrangements in contractual service of process clauses – ideally having an agent within Ireland authorised to accept service of proceedings in Ireland thus avoiding the need to later serve these proceedings on a party in the UK.
For more information please contact Eileen Roberts, Partner or any member of the Litigation & Dispute Resolution team.
Date published: 27 January 2021