Law Applicable to Contractual Obligations and Non-Contractual Obligations (Amendment etc.) (EU Exit) Regulations 2019

Lord Thomas of Gresford Excerpts

Monday 25th March 2019 Grand Committee

Our approach has been to retain in domestic law as far as conceivably possible the relevant Rome I and Rome II provisions, and to apply the provisions of the convention. I beg to move.

[Lord Thomas of Gresford (LD)]

My Lords, I think it very appropriate that the Ministry of Justice should decide as a principle as far as possible to preserve the existing rules as they currently apply in the UK immediately after exit day. The purpose is,

“to provide maximum certainty and stability for businesses and individuals”.

However, I am concerned about the impact on business, even though the impact assessment does not throw up anything in particular. I am always very conscious of the strength of Hong Kong, which built its reputation and financial power on the fact that it uses English common law as the basis of its legal system. That means that contracts are readily made and understood, which has been of great economic benefit to Hong Kong. I notice that the impact assessment refers to the,

“strong international reputation as a centre of legal excellence”,

that this country currently enjoys. Anyone connected with the law knows that our legal profession has a great reputation, English law is frequently the preferred law and English courts are used even though a particular dispute has nothing to do with England, so this is a very profitable part of the legal world.

I shall take as an example one matter referred to in paragraph 7.7 of the Explanatory Memorandum, which refers to,

“the law applicable to non-contractual obligations arising from infringements of unitary EU intellectual property rights … Trade Marks … Design Rights and … Plant Variety Rights. These unitary EU IP rights will no longer apply in the UK … and UK courts will no longer hear proceedings relating to such rights after exit day”.

It seems to me that there is a whole area of law which may be cut out from the jurisdiction of English courts and the services of English lawyers.

That is compounded by the fact that these regulations remove the ability of UK courts to refer questions of interpretation of the 1980 Rome convention to the Court of Justice of the European Union—to my mind, that is a significant restriction—just as the interpretation of retained EU law generally cannot be decided by that court. We are going from a well understood legal system to something that is much more limited than we have been used to.

On the broad basis, however, the fact that the rights are generally retained is to be welcomed.

[Baroness Chakrabarti (Lab)]

My Lords, in an attempt once more to be succinct, I can echo the point that the noble Lord, Lord Thomas, was making. The concerns from this side are essentially about regulatory diversion. I do not think anybody is going to object to these regulations; the concern is with ongoing regulatory divergence and its potential impact, whether it is on unfair competition cases or IP cases and so on. Perhaps the Minister might consider briefly that risk of regulatory divergence in his reply.

In relation to insurance, the Explanatory Memorandum says:

“The Government engaged with representatives of the insurance industry”,


in relation to “insurance risks”. Can the Minister outline the types of risks identified in that engagement? We are told that banks and insurers are shifting hundreds of billions of pounds in assets out of the UK ahead of exit day to keep their contracts and policies within the EU area. We have learned that Aviva, Britain’s second largest insurer, will transfer around £9 billion in assets to a new Irish company, for example. Does the Minister agree with having that sort of risk to our economy? Does this reflect the concern about different outcomes that could result from insurance contract cases being resolved differently in our courts and those of our EU partners in the future?

As I say, my general proposition is on the risks of regulatory divergence, but one can hardly object to the instrument itself.