Time to Act: Recognition and Enforcement of Judgments Post Brexit
The United Kingdom (“UK“) is leaving the European Union (“EU“). There is no doubt that Brexit will happen; the only open question is when. One of the post-Brexit realities we can anticipate, however, is that the recognition and enforcement of foreign judgments between the remaining EU Member States and the UK is likely to become a rather convoluted and burdensome process. Therefore, anyone seeking enforcement of a judgment rendered by a UK court in one of the remaining Member States or vice versa is advised to try to initiate execution proceedings before 29 March 2019 – the date on which Brexit is currently set to occur.
Likewise, before filing a complaint, anyone who has a possible claim against a person or a company in the UK should carefully assess where a judgment would need to be enforced and whether the enforcement of such a judgment would even be possible after Brexit. Unfortunately, even if a complaint was filed today, final judgment is unlikely to be rendered by 29 March 2019, considering the average duration of proceedings for complex matters in German courts.
Inapplicability of Regulations on European Civil Procedure Post Brexit
Current EU regulations provide rules for a variety of cross-border issues in international civil procedure. As these regulations apply directly – and do not have to be transformed into the national law of the Member State – they will in principle cease to apply to the EU-UK relationship at the moment Brexit occurs. Moreover, it is unclear whether these regulations will be replaced at all and, if so, in what way. Certainly, the draft for a “European Union (Withdrawal) Bill”, which is currently under consideration by English Parliament, the House of Commons, foresees the transformation of EU regulations into national UK law. However, even if this piece of legislation was enacted in its current form, this clause would only lead to the application of EU law within the UK – and not apply to the relationship between the UK and the remaining EU Member States. While the UK can of course decide for itself under which conditions it will recognize and enforce a judgment from one of the remaining EU Member States, it naturally does not have the competence to make rules for the recognition and enforcement of judgments from the UK within the Member States. This requires a withdrawal agreement.
The content of a withdrawal agreement regarding questions of European civil procedure remains open. So far, both the UK government  and the European Commission  have issued position papers on this topic. Both papers state as an objective for the negotiations that the current applicable law will continue to apply to proceedings pending at the moment of the withdrawal. What is going to happen with regard to proceedings after that date remains open.
Regulations pre- and post Brexit
Regulation (EU) no. 1215/2012 is the main regulatory instrument regarding European civil procedure. The regulation provides for the international jurisdiction of courts, the requirements regarding choice-of-court agreements, and the recognition and enforcement of judgments. If the UK and the remaining Member States do not execute an appropriate withdrawal agreement, then the national law of the respective forum state would apply post Brexit.
However, Germany and the United Kingdom entered into the Convention for the Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters on 14 July 1960 (“German-British Convention”). The German-British Convention will partially replace Regulation (EU) no. 1215/2012 in the UK-German context unless an appropriate withdrawal agreement provides otherwise. However, the Convention is not a perfect solution as it falls short of the modern regulations.
Complications in the Recognition and Enforcement of Judgments from the UK
The impending inapplicability of Regulation (EU) no. 1215/2012 post Brexit will have serious consequences, especially with respect to the recognition and enforcement of judgments. Right now, the Member States recognize and enforce judgments of the other Member States without the need of a so-called exequatur procedure. Currently, it is sufficient to submit the documents from the judgment Member State as listed in Article 41 of the regulation to the competent enforcement authority in the recognizing Member State. The non-recognition of a judgment by the recognizing Member State can only occur upon the application of an interested party if the party successfully argues that one of the reasons listed in Article 45, para. 1, applies. The regulation therefore makes it possible to enforce a judgment from another EU country in almost the same amount of time as it would take to enforce a national judgment.
The renouncement of exequatur proceedings is not a matter of course. The current process relies on the fact that all Member States have to obey the same laws by virtue of their membership in the EU, something that will of course no longer be the case after Brexit. If the UK and the EU agree upon rules for European civil procedure in an appropriate withdrawal agreement, this will unlikely include an entire omission of exequatur proceedings. But even if simplified exequatur proceedings are enacted post Brexit (and this would be the best-case scenario), it still would mean that the enforcement of judgments will become a more difficult and time-consuming process than it is right now.
If no new rules are agreed between the EU and the UK, then the German-British Convention would apply vis à vis the UK and Germany. But as mentioned above, the Convention, by virtue of its operation, adds complexity to the process which currently does not exist. The Convention allows for the enforcement of judgments over a specified amount for a definite sum of money. Further, per Article VI of the German-British Convention, a judgment rendered by a German court must first be registered with the appropriate court in the UK before an enforcement proceeding can start. And in order to enforce a UK judgment in Germany, one must first apply for, and receive, a declaration of execution from the appropriate German court (per Article VII of the Convention). This means that an enforcement proceeding can begin only after the German court issues a judgment for the declaration to execute. Needless to say, this will lead to substantial delays and increase the costs of the litigation. In addition, Article III of the Convention lists potential reasons for the denial of recognition and enforcement which go beyond the reasons listed in Regulation (EU) no. 1215/2012. This could mean that judgments that are recognizable and enforceable per the current regulation, would no longer be recognized and enforced after Brexit.
These uncertainties and complexities can seemingly be avoided if litigants strive to progress, or ideally, conclude, any such proceedings to the extent possible before Brexit occurs.
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Any questions? Please contact: Dr. Kathrin Nordmeier
Practice Group: Litigation, Arbitration & ADR