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Will Brexit impact contract enforcement?

The UK Government has issued a position paper setting out its vision for “a new, deep and special partnership” with the European Union in matters relating to enforcement and dispute resolution when the UK exits from the EU. 

What does Brexit mean for dispute resolution?

Brexit means that the UK will not be bound by, nor have the benefit of, the EU legislative framework which affords mutual recognition and enforcement of judgments across the member states of the EU.  Following Brexit, the procedure for enforcing a judgment obtained in one of the EU27 member states in the UK, and vice versa, may not be as streamlined. There could be potential for conflict in relation to a cross-border UK-EU dispute.  

Why is this important to internationally focused business and individuals?

Many commercial contracts are governed by the laws of England and Wales, meaning that disputes arising under those contracts would generally be resolved in the courts of England and Wales.  Following Brexit, it is not clear how judgments obtained in those courts will be enforced across the rest of Europe.   Like Ireland, the UK operates a court system that is English speaking and, similarly to the US, is based on an established common law regime, rooted in due process and the doctrine of precedent.  The familiarity of legal systems, and the ability, currently, to enforce contractual rights and judgments in all member states makes the UK – and Ireland – an attractive place to do business for international companies and individuals

Internationally focused businesses, engaged in commercial activities throughout the EU, require comfort that their contractual rights can be enforced effectively and efficiently through the courts of the jurisdictions in which they have operations.  Brexit brings uncertainty in this regard. 

What does the UK hope to achieve?

In the position paper, the UK pledges its commitment to engage in constructive negotiations with the EU to achieve a solution in which both sides benefit from a shared, cross-border, dispute framework, with stream-lined procedures which aim to avoid unnecessary hurdles to enforcement.

The UK hopes to achieve its aims through agreements yet to be negotiated and agreed in the context of Brexit.  Such future agreements governing the UK’s withdrawal from, and further partnership with, the EU would then require to be implemented through UK domestic legislation and, presumably, EU implementing legislation.

What next?

At this stage in the Brexit negotiations the terms of the UK’s exit are unknown.  Whilst the UK’s position and objectives are clear from the paper, it seems that it will be some time before a clear road map is available. 

The UK Government’s position paper of “Enforcement and dispute resolution – a future partnership paper” is available here.