McDermott Comment | The Impact of Brexit on the English Legal Industry
Nick Holland, partner, McDermott Will & Emery:
Despite reassuring news about the UK and the EU being on the verge of reaching a deal, London’s appeal as a destination of choice for legal disputes remains in serious jeopardy. In 2019, the number of cases heard in the Commercial Court was down 10% on a year prior. In 2020, new filings in the Commercial Court and the Chancery Division are down 50%. Some of the latter decline is Covid-19 related but likely very little of it: the UK Government did not extend limitation or appeal periods; hearings moved on line and the Courts were not remotely sympathetic to adjournments until “normality” returned; and England’s rules of civil procedure do not require personal service to commence proceedings. Something else is awry; what is it?
Brexit has caused uncertainty as to the enforceability of English judgments and with good reason. Currently the Brussels Recast Regulation makes English judgments easily enforceable across the EU and the Lugano Convention makes enforceability in the EEA states similarly straightforward. UK judgments will cease to be enforceable under either one for any proceedings commenced after 1 January 2021. The only relevant agreement will be the Hague Convention on Choice of Court Agreements but it will only assist with enforcement where the contracts in dispute contain an exclusive jurisdiction clause and were concluded after 1 January 2021. However, many English financial arrangements do not contain exclusive jurisdiction clauses and trusts are contracts so neither of these can rely on the Hague Convention. Some EU jurisdictions allow for enforcement of foreign judgments under their national law through for example exequatur proceedings (but these are cumbersome compared with the current regimes) and some do not.
The Brexit “deal” contains agreement for admission to the Lugano Convention but that is not yet agreed and even when it is there is a three month waiting period before it becomes effective.
Drafting lawyers did not just wake up to this issue. They have known about it since shortly after the Brexit vote and many stopped using English court clauses years ago. No wonder there are so few international cases now before the English courts.