loading

Brexit and its impact on jurisdiction, choice of law and enforcement: How does it affect you?

Malta and the UK share a long and colorful history, with Malta having been a British colony for one hundred and fifty years. Whilst Brexit will undoubtedly impact all the remaining twenty-seven Member States of the European Union, Malta is no exception, particularly given the close economic ties between the two.

Ever since the United Kingdom’s (‘UK’) vote to leave the European Union in 2016, there have been several discussions as to the effects of this departure. Perhaps, most people were concerned with business, trade and travelling and not so much as to the more legal nitty gritty. Maybe, many think of Brexit as something which is not likely to affect them personally. Nonetheless, if one had to look into his employment agreement, or maybe his lease agreement or a promise of sale agreement, all of which many individuals at some point or another in their lives are a party to, one is likely to find a choice of law clause and/or a choice of court clause should any disputes arise from such agreements. In addition, several warrants are filed yearly in the Maltese law courts, most of which are filed by lay people in the hopes of getting paid that which is due to them from their debtors. Without enforcement, a judgment or other executive title in your favor is just a piece of paper. How do you go about and enforce an executive title you obtain against a person, legal or natural, who is set in the UK or has assets in the UK, now that Brexit is a done deal? Similarly, one may be situated in the UK and has a cross-border dispute with a person, legal or natural, located in Malta. How does a person in the UK proceed against someone who, for instance, has assets located in Malta?

It is important to consider how Brexit affects choice of law, jurisdiction and enforcement of judgments and other authentic instruments. Although these may seem of secondary importance to many non-legal professionals, these may very well pose some challenges especially considering that the mechanisms in place to regulate enforcement and jurisdiction emanate from the European Union.

The parties’ choice of law, which within the European Union legal framework is regulated in terms of the Rome I and Rome II Regulations, for contractual and non-contractual obligations, respectively, will not be greatly impacted. This is particularly because these Regulations do not require reciprocity between States and thus, will continue to apply. On the other hand, there is a notable difference brought about through Brexit in relation to jurisdiction and enforcement of judgments. Within the EU the Brussels (Recast) Regulation 1215/2012 applies for the enforcement of judgments but this regulation will no longer continue to apply for enforcement of judgments given in proceedings which began after the 1st of January 2021.

Considering the above, enforcement of an English court judgment in EU Member States has become less straightforward for new proceedings. In the absence of the applicability of the Brussels (Recast) Regulation, the Hague Convention will apply so as to fill in the gaps left due to the inapplicability of the Brussels (Recast) Regulation.  However, this is not necessarily a smooth transition especially considering that this Convention only applies to choice of court agreements concluded after its entry into force and it applies solely to exclusive jurisdiction clauses. Therefore, in cases of asymmetric choice of court clauses i.e. it could be the courts of England or a Member State, or even, non-exclusive jurisdiction clauses, local law of the State in which proceedings are brought would apply.

There is also an intention on the UK’s part to apply the Lugano Convention instead of Brussels (Recast). The Lugano Convention of 2007 regulates recognition of jurisdiction clauses and enforcement of judgments between EU Member States and the EFTA States. However, this is not the same as the Brussels (Recast) but more in line with the Brussels I Regulation pre the 2012 amendments. This Convention requires mutual reciprocity between States, meaning that its application is unclear as of yet.

All in all, it results that there are still several issues pertaining to court litigation post-Brexit. Nonetheless, owing to the long history between Malta and the UK, we have a special law in force, dating back to 1924 which regulates the enforcement of British judgments. With the implementation of the Brussels regime, this law had become obsolete but despite the fact that it is over eighty years old, Chapter 52 is likely to prove to be of great value now that the UK is considered a third country and has officially cut its ties with the European Union. The British Judgments (Reciprocal Enforcement) Act, caters for the faculty of having a judgment obtained in the superior courts of the UK, enforced in Malta by the person by whom the judgment was obtained, by means of an application to the Maltese Court of Appeal for its registration, within twelve months after the date of the said judgment. Once registered, the foreign judgment given in the original court has the same force and effect as if it had been given in the registered court. On the other hand, where a judgment has been obtained in a superior court in Malta against any person, a certified copy of the judgment must be issued, on an application made by the judgment creditor and on proof that the judgment debtor is a UK or a British dominion resident.

With regards to the service of documents, following Brexit, the EU Service Regulation will no longer apply and instead, similarly to the enforcement of judgments, the Hague Service Convention will now apply. All the twenty-seven Member States are party to the Hague Service Convention. This can eventually prove to be more costly and time-consuming. Nonetheless, even though it is restricted to civil and commercial matters, it is still a much wider convention with over seventy signatories. Moreover, as of recently, the Maltese Courts have been more open to accepting and allowing service of documents such as sworn applications, to other jurisdictions via Courier, especially when it is an urgent matter provided that there is clear evidence that such document was in fact served.

Every change is bound to bring with it some degree of uncertainty. Surely, Brexit is no exception. In this area of the law regarding choice of law, jurisdiction and enforcement, we are yet to see what challenges Brexit will pose in practice in the months and years to come. Eventually, it could be that arbitration will start gaining more popularity as a dispute resolution method, especially because Brexit does not affect the jurisdiction of arbitral tribunals or enforcement of arbitral awards between the UK and EU Member States.

Ultimately, Brexit is still extremely fresh and one will need to see in due course whether the UK will uphold its reputation of being one of the most sought jurisdictions when it comes to resolution of disputes emanating from cross-border commercial agreements.

Should you require further information or assistance in relation to the above, please do not hesitate to contact us on info@dfadvocates.com

Photo: I-Stock

FOCUS ON

MEMBERS OF