Following on from our guide to Brexit and Contracts here, Julie Murphy O'Connor, Karen Reynolds and Gearóid Carey conclude the Cross Border Disputes series with a look at how Brexit will affect cross border disputes, in particular the service of proceedings in such disputes.
How will the service of court proceedings be affected by Brexit?
One perceived area of risk in the conduct of civil and commercial proceedings post-Brexit relates to whether service of process will become more difficult. Currently, UK court proceedings may be served on defendants in other EU Member States, and proceedings from EU Member States may be served on UK based defendants, in accordance with the Service Regulation (Regulation (EC) No 1393/2007) (the “Service Regulation”). This can be relatively quick and cost effective.
If the Withdrawal Agreement and Political Declaration on the future relationship between the UK and the EU (the “Withdrawal Agreement”) comes into force, the current provisions regarding service that apply pursuant to the Service Regulation will continue during the transition period ie, to the end of December 2020. It is unclear what will happen at the end of the transition period, but either a new arrangement will be negotiated or the no-deal Brexit scenario (addressed below) will apply.
In the event of a no-deal Brexit:
- The UK Government has prepared a draft statutory instrument (draft Service of Documents and Taking of Evidence in Civil and Commercial Matters (Revocation and Saving Provisions) (EU Exit) Regulations 2018) which provides that documents for service received before exit day (but as yet unserved) will still be served in the UK in accordance with the Service Regulation. However, the EU’s Notice to Stakeholders, Withdrawal of the United Kingdom and EU rules in the field of Civil Justice and Private International Law, published on 18 January 2019, indicates that pending requests for service from the UK, will not be progressed after Brexit.
- More generally, claimants will be able to effect service on defendants in EU Member States in accordance with the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters 1965 (the “Hague Convention on the Service of Documents”). This will govern (i) proceedings issued post-Brexit, (ii) proceedings from EU Member States not received by the UK authorities for service before Brexit, and (iii) UK proceedings received but not yet served by EU Member States before Brexit. It is similar to the Service Regulation in that it also operates through a system of (i) central authorities designated to receive requests for service and (ii) classes of party entitled to request service abroad. This instrument is already well-known and utilised for service in international disputes (with 74 States having acceded to it), albeit it is slightly slower and more complicated than the system prevailing under the Service Regulation. Ultimately, service of proceedings involving the UK will not be significantly affected, although it will be somewhat less convenient.
- Notwithstanding the potential benefits of the Service Regulation over the Hague Convention on the Service of Documents, one way of avoiding this issue is to include within contracts with a UK counterparty a provision authorising service on a process agent at a designated address, whether within the UK or Ireland. Service in this way – on a process agent – will be wholly unaffected by Brexit, whatever the outcome of negotiations.