This note looks at how Brexit will affect cross border disputes in particular the service of proceedings and enforcement of judgments in such disputes.
This is particularly relevant where a counterparty to a contract or a dispute is domiciled in the UK.
The stumbling blocks presented by Brexit are largely concentrated at the beginning and end of the process – the institution of proceedings and the enforcement of judgments.
Generally, if you wish to bring an action against a person or entity residing outside Ireland you must seek the leave (permission) of the Irish Courts. If granted permission by the Irish Courts you are then permitted to issue proceedings and serve them on the person or entity outside of Ireland.
The ability to institute proceedings against persons or entities domiciled in the European Union is streamlined by European Union law. EU Regulation 1215/2012 (on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters) allows litigants to issue proceedings in Ireland without the leave of the Irish Courts in specific circumstances – for example where Ireland is the place of performance for the contractual obligation in dispute.
Likewise, Ireland’s membership of the European Union affords litigants the ability to enforce judgments obtained in Ireland throughout the European Union in an efficient manner pursuant to the EU Regulation 1215/2012 and EC Regulation 805/2004 establishing the system of European Enforcement Orders for uncontested monetary judgments.
Also, EU Regulation 1393/2007 (on the service in the Member States of judicial and extrajudicial documents in civil or commercial matters) provides a streamlined method of serving proceedings commenced in Ireland on a person or entity domiciled in the European Union.
These provisions and procedures will remain in place until 31 December 2020 until the end of the transaction phase of Brexit.
The UK has indicated that post-31 December 2020 it will no longer be or remain a party to these Regulations.
What this means post-31 December 2020 (and absent any specific agreement) it that a litigant may need to:
- apply to the Irish High Court for leave to issue proceedings against defendants domiciled in the UK; and
- enforce Irish judgments in the UK through local UK enforcement mechanisms and requirements which could include commencing fresh proceedings rather than being able to rely on any judgment of the Irish Courts.
This has the potential to result in cross-border litigation becoming more expensive and protracted.
However, the UK has indicated that post-31December 2020 it will remain a party to the 1965 Hague Convention which governs the service of judicial and extra-judicial documents in non-EU member states which provides a framework similar to EU Regulation 1393/2007 for the service of proceedings.
The UK has also indicated that it will apply the 1988 Lugano Convention governing jurisdiction and enforcement of judgments in civil and commercial matters which provides a framework similar to EC Regulation 805/2004 for enforcement of judgments.
Assuming the UK applies both the 1965 Hague Convention and the 1988 Lugano Convention post-31 December 2020 then mechanisms are in place for the service of proceedings and the enforcement of judgments originating from the Irish Courts on UK domiciled persons or entities. However, these systems are more cumbersome, more complicated and less convenient that the current systems under European Union law.
One method of avoiding issues with service of proceedings is to include within contracts with a UK counterparty a provision authorizing service on a process agent at a designated address within Ireland. Service on a process agent will be wholly unaffected by Brexit. Provisions of this nature are now becoming more common in certain types of contracts (leases; financing and security documents and commercial contracts).
Until the post-31 December 2020 position is clarified either in an EU-UK agreement or the formal adoption/use of the 1965 Hague Convention and the 1988 Lugano Convention by the UK what is certain is that uncertainty will prevail in this field.