Reading the Tea Leaves? Private International Law in England after EU Exit

The events of 23 June 2016 have turned lawyers into end of the pier fortune tellers.  Starved of signal, and befuddled by noise, who among us has not uttered a sentence to a client or colleague in the past few months beginning with the words ‘it is too early to say, but...’.

In the present political climate, it is tempting to say that all is speculation and that little is to be gained by speculation of this kind.  But - departing from rule drilled into me at primary school never to begin a sentence with that word - it seems too good an opportunity to miss to engage in a little tarot reading with respect to the future shape of private international law (or the conflict of laws) in the United Kingdom.

The necessary starting point is an assessment of how the legal landscape would appear if the UK were to leave the European Union without an agreement of any kind with regard to these matters, and without taking steps to preserve the legal effect of the EU instruments that will cease to bind it as a matter of treaty law upon exiting.  Focussing on the main instruments in the civil and commercial sphere with which I am most familiar, my own assessment can be summarised as follows (for more detail, see A Dickinson, 'Back to the future: the UK's EU exit and the conflict of laws' (2016) 12 J.Priv.Int.L. 195).  In the area of jurisdiction and judgments, the UK would no longer have the benefit of the Brussels I Regulation or Lugano II Convention, nor probably the conventions that preceded them, and (if no better arrangement can be negotiated) would need to fall back on a combination of the ‘common law’ rules of jurisdiction and recognition/enforcement, their equivalents in other Member States and a few, dated treaties for the enforcement of judgments.  With regard to the latter treaties, there would be no guarantees that other Member States would have the mechanisms in place to undertake their moribund treaty commitments.  More happily, in the area of contractual obligations, with the loss of the Rome I Regulation, we would be able to fall back on the rules of the Rome Convention, as given force of law under the Contracts (Applicable Law) Act 1990, whether the Convention remains in force (as I believe it does) or not.  In the area of tort law, Part III of the Private International Law (Miscellaneous Provisions) Act 1995 would once again become the main instrument, replacing the Rome II Regulation; but ill defined common law rules would apply to other non-contractual obligations (unjust enrichment; equitable obligations).

From this baseline, it now appears that we can venture a little further and with a little more confidence.  The recent announcements at the Conservative Party Conference of the proposed (but appallingly titled) Great Repeal Bill, translating EU law at the point of exit into sovereign UK law enable us to build upon this.  It is, perhaps, worth noting the words of the (appallingly titled) Secretary of State for Exiting the European Union in his conference address, that:

‘To ensure continuity, we will take a simple approach. EU law will be transposed into domestic law, wherever practical, on the day we leave. It will be for elected politicians here to make the changes to reflect the outcome of our negotiation and our exit.’

For present purposes, the key words in this quotation are ‘wherever practical’ and ‘to reflect the outcome of our negotiation’.  The former words, although elastic in their content, indicate that the Government is grappling with the obvious point that translation may be difficult or impossible for instruments that rely on EU institutions, the treaty framework, or reciprocal treatment from other Member States for their effectiveness.  The Brussels I Regulation provides a clear example.  The central feature of that Regulation is the provision for more or less automatic recognition of Member State judgments founded upon the principle of mutual trust.  The free movement of judgments is, in turn, closely linked to, and indeed parasitic upon, the internal market in goods, services, and people.  Whatever position the UK may take in negotiations on the question whether it is desirable to retain the Brussels I Regulation or an equivalent regime for the UK, it would not be surprising, in the current climate, if other Member States and the Commission took the view that the UK's participation in the single market is a pre-condition for establishing close links between the judicial systems of the UK and the EU that would be preserved by the UK's participation in the 2007 Lugano Convention, or by a treaty reflecting the Brussels I regime.  What is clear in any event is that, absent an arrangement of the latter kind (and there could be no such arrangement without the EU's consent), it would not be practical for the UK to carry forward the Brussels I Regulation into its post-exit law.  The essential reciprocity in legal and practical terms would be lacking, and the rules of jurisdiction (giving preferential treatment to defendants, consumers, employees and insured parties from other Member States, and addressing conflicts of jurisdiction between the courts of two Member States) would no longer make sense in isolation. The Brussels I Regulation would, at best, provide a source of inspiration for future reform of rules of jurisdiction in England and Wales, or Northern Ireland (Scotland has already followed this course).  However desirable such reform may appear given deficiencies in the current residual rules of jurisdiction, which confuse jurisdiction with service, it seems hopelessly optimistic to expect that this will be addressed as the UK passes through the exit door.

If then the Brussels I Regulation is to disappear, the UK must surely seek to secure for itself at the earliest possible opportunity the consolation prize of participation alongside the EU, Mexico and Singapore in the 2005 Hague Choice of Court Convention.  This will secure an important and valuable measure of reciprocity in cases where the parties have chosen UK courts (and, in particular, the Commercial Court in London) as the venue for resolution of disputes arising out of their international contracts.

The picture now appears clearer insofar as the applicable law instruments, and, in particular, the Rome I and Rome II Regulations are concerned. Whereas it appeared doubtful whether there would be the political will or time for these instruments to be individually incorporated into UK law after exit, the favoured model of a Great Repeal Bill suggests that it is now more likely than not that they will be carried over into UK law, and this is to be welcomed.  The practical considerations affecting the continued application of the Brussels I Regulation do not apply here, although minor amendments to the instruments will be necessary to remove the elements inter-woven with participation in the internal market (such as the insurance contract provisions (Art 7) in the Rome I Regulation, the provisions of the Rome II Regulation concerning restrictions of competition (Art 6(3)) and unitary Community intellectual property rights (Art 8(2)) and the Recitals and Articles (Rome I Regulation, Recital (40) and Art 23; Rome II Regulation, Recital (35) and Art 27) giving priority to other provisions of EU law).  The devil, as always, is in the detail and it is to be hoped that the relevant Government departments, notably the Ministry of Justice, will work closely with experts in the field to ensure that the transition is a smooth one.

As well as tackling this myriad of detail, those involved in the Art 50 negotiations and in drafting and debating the Great Repeal Bill will have to address fundamentally important issues such as the role of the jurisprudence (past and future) of the European Court of Justice in relation to the translated instruments.  Here, it is suggested, the second Protocol to the 2007 Lugano Convention provides a valuable template, combining a duty to take into account the jurisprudence of all national courts applying the Convention, as well as of the European Court, with the ability of non-EU Member States to submit observations upon preliminary references to the Court of Justice and mechanisms for the exchange of information about judgments delivered.

Finally, and perhaps most importantly, it is understandable that the Government does not wish to disclose its negotiating hand in relation to matters such as the future of the Brussels I Regulation before the Art 50 process has begun in earnest.  There are, however, matters such as adoption of the Hague Choice of Court Convention and continuation of the Rome I and Rome II Regulations within UK law which are in the hands of the executive and Parliament, and which can be done without the agreement of our EU partners. Early announcements of the Government's intention to pursue these options irrespective of the outcome of Art 50 negotiations would significantly reassure commercial parties and their legal advisers, and protect the UK's position as a centre of legal and judicial excellence.  They would also strengthen the UK's negotiating position by demonstrating a clear, strategic approach to civil justice issues.

Within a few weeks of the referendum, we have heard strong voices from other Member States suggesting (perhaps, hoping) that the UK's influence as a centre of dispute resolution within Europe will be significantly weakened as a result of its loss of access to the area of justice (see, for example, the posts by Basedow and Hess and Requejo-Isidro).  The most significant present danger is not the prospect of exiting the EU's area of justice, but the uncertainty that this prospect generates as to the topography of the future legal landscape: on-going instability in the dispute resolution framework will likely be detrimental to the UK's position as a leading centre for international commercial dispute resolution (itself linked, for example, to the UK's strong positions in the markets for insurance and legal services).  Against this background, the doubts generated by Brexit can be best addressed by an early indication from the Government that the UK wishes to retain close links with other Member States in the field of civil justice, and to maintain a common body of rules for civil and commercial matters insofar as it is practicable to do so.  Although some Member States may see an opportunity to promote their own courts (some of which allow proceedings to be conducted in the English language), others will no doubt welcome continuing, stable connections to the UK's judicial systems.  There is, in my view, little doubt that the UK's interests would be better served by this approach, and by early signals in that direction.

Andrew Dickinson is a Fellow and Tutor in Law at St Catherine's College and Professor of Law at the University of Oxford. This post is based on a presentation at a seminar, Changes and Challenges in Cross-Border Litigation, held at the Society of Advanced Legal Scholars on Friday 7 October 2016. The views expressed are the author's personal views.