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Top Tips for Preparing for disputes with EU businesses post-Brexit

27 October 2020 #Dispute Resolution #Brexit


Businesses rarely enter contracts intending or even expecting them to end in dispute.  But that often happens.  The wise approach is to prepare for the worst and hope it never happens.

EU law on dispute resolution will cease to apply in the UK from 31 December 2020.  Disputes between UK and EU businesses will then be subject to new rules.  The final rules are still tied up in the Brexit negotiations and our note on the future of EU dispute resolution Resolving disputes with European Businesses Post-Brexit Document explains some of the possibilities.

One thing that is clear is that Brexit is going to bring changes to the way you and your EU business partners operate.  Inevitably that will increase the risk of disputes. More so than ever before, preparation is key to mitigating the fall-out from disputes.  Below are some practical steps for UK businesses who trade with European business to consider for mitigating some of these risks.

  1. The rules haven’t changed yet. If you have a claim against an EU based business and want the certainty of the current rules, speak to a lawyer about starting legal proceedings before 1 January 2021.
  2. Review existing contracts with EU businesses to check which Court is to decide your disputes and which law will apply.
  3. For contracts that don’t cover these issues, speak to a lawyer about entering a side agreement to fill the gaps.
  4. You may want your disputes decided by the English Court and for English law to apply. That should mean disputes are decided at a convenient location for you, rather than overseas. The other option to consider is Arbitration in the UK.  The rules for Arbitration will be unchanged by Brexit.
  5. Consider also requiring your EU business partners to appoint an agent in the UK to accept service of UK legal proceedings. That should avoid delay and added expense in the future if you have a dispute with the EU business.
  6. For new contracts with EU businesses, make sure all the above issues are carefully considered and documented. Which Court is to decide your dispute? Which law is to apply? Do you want Arbitration instead?  Require the EU business to appoint a UK agent for service of legal proceedings?
  7. Keep an eye on the Brexit negotiations in case anything changes. Clarkslegal LLP will be publishing updates so check our website. One possibility is the EU refusing to admit UK to the Lugano Convention.  If so, the only international treaty regulating UK disputes involving EU businesses will be the Hague Convention (see link for more details).  If that happens:
    1. Consider reaffirming your contracts with EU businesses immediately after 1 January 2021 to confirm that the English Court shall have the exclusive jurisdiction to decide disputes. Existing contracts entered before 1 October 2015 are definitely not covered by the Hague Convention and the EU believe that contracts pre-dating 1 January 2021 are not covered either.
    2. If you do end up with a claim before the English Court against an EU business after Brexit, consider carefully how you are going to enforce your Court judgment. You may need to take overseas legal advice from the country where the EU business has its assets.
    3. If you are sued by an EU business in the English Court consider asking the Court to require the EU business to pay funds into court or provide a bank guarantee as security for your legal costs if the claim is not covered by the Hague Convention. That could save you considerable inconvenience and expensive recovering your professional costs from the EU business is you successfully defend the claim.

We recommend all UK businesses review their existing EU business relationships with the above practical tips in mind.  Always speak to a lawyer before making any changes to your contracts to ensure that all consequences of those changes are considered.

Clarkslegal, specialist Dispute Resolution lawyers in London, Reading and throughout the Thames Valley.
For further information about this or any other Dispute Resolution matter please contact Clarkslegal's dispute resolution team by email at disputeresolution@clarkslegal.com by telephone 020 7539 8000 (London office), 0118 958 5321 (Reading office) or by completing the form on this page.
Disclaimer
This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full General Notices on our website.

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