Brexit: Justice for Families, Individuals and Businesses (EU Committee Report)

Lord Keen of Elie Excerpts

Wednesday 20th December 2017 Lords Chamber

[The Advocate-General for Scotland (Lord Keen of Elie) (Con)]

My Lords, on the noble Lord’s last point, it is not for me to anticipate the Uber decision but the hint might be in the existence of the motor vehicles.

I begin by congratulating the noble Baroness, Lady Kennedy of The Shaws, on securing this debate. The question of the EU’s departure from the European Union is well-trodden ground in this House by now, but the question of future civil judicial co-operation between the United Kingdom and the EU has perhaps not received as much attention. I commend her and her sub-committee for the work they have done to address this. I would also like to thank, through her, the witnesses who contributed to the inquiry and whose experience and expertise we value very highly. It is because of that expertise that this is such a commendable report.

The debate gives me the opportunity to set out to your Lordships the Government’s position on this technical but important subject, to the extent that I can while we are in the course of a negotiating process. Before addressing the specific issue of civil judicial co-operation, and dealing with the points made by your Lordships, it may be worth some scene-setting.

Since June, we have worked intensively with our European partners to settle the issues in the first phase of our negotiations to leave the EU. We have made good progress and reached agreement with the EU’s negotiators on some very difficult issues. Nearly two weeks ago, the United Kingdom and the EU negotiating teams issued a joint report on the progress they have made on the three areas covered in the first phase of the negotiations. It proposes a fair deal on citizens’ rights that allows for UK and EU citizens to get on with their lives broadly as now in the country in which they live; it agrees a financial settlement that honours the commitments we undertook as members of the EU, involving a fair delivery of our obligations; and it contains an agreement on the island of Ireland that preserves the territorial integrity of the United Kingdom and the stability that has been brought about by the Belfast agreement.

As your Lordships will know, last week, the European Council agreed that this report represents sufficient progress and that we should now move on to the talks about our future partnership. This allows the next stage of negotiations to proceed, and the Council has agreed that there should be quick progress on agreeing an implementation period.

On that implementation period, the United Kingdom Government’s proposal is to ensure that businesses and people have time to adjust, and to allow new systems to be put in place. We believe that any implementation period should be strictly time limited—to around two years, as noble Lords are aware. I emphasise that it should be based on the existing structure of EU rules and regulations, during which the UK and the EU would have access to one another’s markets on current terms, and the UK would take part in existing security and other measures. Of course we welcome that progress. It is in everyone’s interests that the talks now move on swiftly during the second phase.

On the subject of this debate, many noble Lords, particularly the noble Lord, Lord Cashman, used the term “certainty and predictability”. Let me be clear that there is consensus about that. Of course, we seek to secure certainty and predictability. But a third word was used by a number of noble Lords that I would also emphasise—reciprocity. Just as we look from the United Kingdom to the EU 27, with concern about how we will ensure suitable civil judicial co-operation following our exit from the European Union, so those 27 countries look to the United Kingdom in the same way, anxious as they are, just like us, to ensure certainty and predictability, because that is what reciprocity brings.

Of course, what we call civil judicial co-operation is the framework that governs a whole spectrum of legal systems work and cross-border situations and provides rules not only in the context of commercial cases, but in the context of family law. As has been noted, the current EU rules are contained in regulations such as the Brussels Ia—the revised regulation on jurisdiction recognition and enforcement of judgments—the Rome I regulation on choice of law in contracts, and the Brussels II regulation, which covers jurisdictional rules for recognition of divorces, and for recognition and enforcement of parental responsibility and other matters. It does not stop there. There is also the insolvency regulation, which is equally important to commerce across the whole of Europe and which covers jurisdictional rules on the recognition of insolvency proceedings, and there are others. There is a guide to them in the paper that was issued by the Government in August this year.

These instruments provide a legal route to resolving, with certainty and predictability, difficult cross-border situations that can arise whether in the context of commercial law or family law. Clearly, these various measures have over the years benefited many citizens of the United Kingdom. Equally, they have benefited many citizens of the EU 27. They have benefited small and large businesses throughout the United Kingdom and small and large businesses throughout Europe. I am obliged for the noble Lord’s encouragement on that.

It is against that background that I emphasise that we are all concerned to secure certainty and predictability. For example, we know that about 3 million EU citizens currently live in the United Kingdom. We wish to ensure that their rights can be certain and predictable going forward. Equally, about 1 million British citizens live in the other EU 27 countries and we wish the same for them. Again, I underline the point about reciprocity. It is not essentially in anyone’s interests to move backwards and wind down from such a position.

Indeed, that certainty is a key foundation of economic growth. Confidence in cross-border commercial contracts and investment relationships is underpinned and enhanced by clear rules governing each country’s jurisdiction, its courts’ responsibility for resolving disputes and its ability to avoid what the noble Earl, Lord Kinnoull, referred to as the Italian torpedo, which was a feature of commercial litigation in Europe until the revision of the Brussels I regulation some years ago. Everyone understands the need for an effective system of cross-border judicial recognition, if I can call it that, in the context of the choice of law, choice of jurisdiction and enforcement proceedings. That is not cut down by any red line. I will return to that in the context of something that was said by the noble Baroness, Lady Kennedy.

The Government are seeking a future agreement with the European Union that allows for close and comprehensive cross-border co-operation. I will return to the point raised by the noble and learned Lord, Lord Hope, about what we are seeking in that context. But what we want to do is reflect as closely as possible the substantive principles of the current framework. They work well for citizens in the United Kingdom and throughout Europe. In addition to other regulations, I mentioned such things as the insolvency regulations, the EU service regulations, the taking of evidence regulations and, in the context of Brussels II and family matters, the Maintenance Regulation. They are all-embracing.

To touch on one or two points, under the repeal Bill, we will incorporate into domestic law the Rome I and Rome II instruments on choice of law and applicable law in contractual and non-contractual matters. If we do that, and Rome I and Rome II already apply in the other EU 27 states, then essentially we will have achieved a level playing field in those matters. There is no need for us to do more than that in the context of Rome I and Rome II.

Of course, in other areas, it will be necessary for us to engage in negotiations with certain parties. The matter does not just stop at the stage of Brussels and the EU; there are countries beyond the European Union. We have signed up to agreements in civil judicial co-operation that apply well beyond the EU: reference was made to the council of the Hague Conference, which gives rise to a series of Hague Conventions in this area. There are also the UNCITRAL—United Nations Commission on International Trade Law—provisions as well, which apply beyond the EU. We will continue to embrace all of those.

The noble Lord, Lord Beecham, suggested that there were perhaps three Hague Conventions that we were interested in, but it goes much further than that. The UK is a signatory to the 1965 Convention on Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters; the 1970 Convention on the Taking of Evidence Abroad in Civil or Commercial Matters; the 1970 Convention on the Recognition of Divorces and Legal Separations, which I accept does not go as far as Brussels II; the 1980 Convention on the Civil Aspects of International Child Abduction; the 1993 Convention on the Protection of Children and Co-operation in respect of Intercountry Adoption; and the 1996 Convention on Jurisdiction, Applicable Law, Recognition, Enforcement and Co-operation in respect of Parental Responsibility and Measures for the Protection of Children. So, there is a great deal more to this subject than just Brussels I, Brussels Ia and Brussels II.

Reference was also made to the Lugano convention, which is the convention on judicial co-operation between the EU and the other EEA countries—Norway, Ireland and Liechtenstein. Denmark has a separate agreement, which I will not go into detail on at the moment. I want to make one point about the Lugano convention, which I accept has not caught up with Brussels Ia —although it is up to speed with Brussels I. It is wrong to suggest that any red line, as it is termed, with regard to the CJEU’s jurisdiction is a barrier. The Lugano convention is not subject to the direct jurisdiction of the CJEU, even though the EU is a party to the Lugano convention. So, there are instruments through which we can achieve judicial co-operation, outwith the direct jurisdiction of the CJEU. That reflects the steps that we are endeavouring to take in present negotiations, and indeed what drives them.

[Baroness Ludford (LD)]

The point that was made in our report, which I certainly tried to make, was that we were not sure how it would be possible for the UK to accede to the Lugano convention in practice, given that it is between the EU and three EEA countries. I did not mention the red line about the CJEU in the context of the Lugano convention; the question was more about how we could manage to insert ourselves into the Lugano convention.

[Lord Keen of Elie]

There is no legal barrier to us becoming a party to the Lugano convention, but that would be a subject of negotiation with the council to the Lugano convention. I believe it was the noble Baroness, Lady Kennedy, who suggested that the CJEU was somehow a red line in this respect. I emphasise that it is not a red line, but it is an issue that has to be addressed in the context of the present negotiations.

I will touch on one or two points made by noble Lords in the debate, beginning with the noble Baroness, Lady Kennedy of The Shaws. Again, I go back briefly to her suggestion that our rejection of the direct jurisdiction of the CJEU had a profound effect on civil judicial co-operation. I simply cannot accept that. It does not apply in the context of the UNCITRAL rules, the Hague convention or Lugano. Therefore, there are clearly areas where we can negotiate and determine judicial co-operation without accepting the direct jurisdiction of that court.

The noble Baroness also observed that Lugano had not been upgraded. I think she suggested it was essentially stuck in aspect, or something of that kind.

[Baroness Kennedy of The Shaws]

I said aspic. It is a sort of jelly.

[Lord Keen of Elie]

Indeed so. I am familiar with it—absolutely ghastly stuff.

It is not stuck; it so happens that the convention has moved more slowly than Brussels in this context. Lugano was essentially in parallel with Brussels I. When Brussels moved on to Brussels Ia Lugano did not accelerate at the same speed, but that is not to say that it is in aspic.

I may have misheard the noble Baroness, but she suggested, in the context of arbitration, that there was no allowance for enforcement of arbitral judgments. That is not the case, because the New York convention provides for enforcement of arbitral judgments. That applies right across the world. It is not limited in any sense to the EU. Again, it seems arbitration—and commercial arbitration, which is particularly important in the context of the City of London, for example—is not affected by these issues of reciprocal judicial agreement and enforcement.

The noble Baroness, Lady Shackleton of Belgravia, suggested that the Government’s response was disappointing. I hope we have moved on from that point. She suggested that the reference to things being wound down would not do, but with great respect, we have no desire to see any of this wound down. We seek certainty, predictability and an outcome that we can say is in parallel with Brussels Ia, Brussels II and the other regulations referred to.

The noble Lord, Lord Cashman, referred to the Brussels regulations having a significant role. He is absolutely correct about that and we acknowledge it. Indeed—I believe I can get this far—we certainly agree as to our goal. He may feel that we are a little less certain than others about how we get to it, but there is no suggestion or intention of us walking away from these regulations. We will have to address the question of the direct jurisdiction of the CJEU and we acknowledge that.

[Baroness Shackleton of Belgravia]

I apologise for interrupting, but I did not invent the phrase “wound down”. I can quote it directly back to the noble and learned Lord. The Government’s reaction to our report was,

“in the event that we do not agree an arrangement for future civil judicial cooperation with the EU, it will be important to have reached a common view on the general principles that would govern how ongoing cooperation in this area could be wound down”.

[Lord Keen of Elie]

That is absolutely correct, but the noble Earl, Lord Kinnoull, brought this out more fully when he distinguished between cases in the pipeline and those that arise post Brexit. As paragraph 91 of the joint report points out, there will essentially be agreement—or consensus; let me put it that way—on how we deal with existing cases at the point when we leave the European Union. But there is no desire to see us walk away or wind down the existing regulatory regime.

The noble and learned Lord, Lord Hope of Craighead, posed two questions in the context of the Government’s response, where we talk about a “close and comprehensive agreement”. It cannot be a mirror of what is already there, because of the jurisdiction of the CJEU, but “close and comprehensive” is what we seek.

The noble and learned Lord’s first question was whether we could give an assurance that the aim is to achieve the same degree of certainty and predictability. The answer, I would suggest, is yes. The aim is most certainly to achieve that. I assure him that there will be no cliff edge. We have no desire for there to be any cliff edge anywhere, but that will be the subject of negotiation because we are now entering the second phase. Perhaps it is more important to point out that the Government’s aim in this context is to ensure that we have certainty, predictability and continuity.

[Lord Hope of Craighead]

What would happen if at the end of the time-limited implementation period it had still not been possible to achieve what the noble and learned Lord said in answer to my first question?

[Lord Keen of Elie]

If at the end of the transition period there had been no agreement, there would be no basis for reciprocal enforcement pursuant to Brussels Ia, Brussels II and those regulations, because we would no longer be a member of the EU for those purposes. That would appear to follow. Nevertheless, there would still be recourse to the Hague convention, although I am the first to accept that the convention provisions do not replicate or achieve the level of predictability and certainty that is in the Brussels regulations.

[Lord Hope of Craighead]

Does that not just heighten the importance of achieving agreement during the implementation period as a matter of urgency?

[Lord Keen of Elie]

I absolutely concur, which is why we and the EU have expressed a desire to move forward to the second phase of negotiations as swiftly as possible. I emphasise that this is about reciprocity. It is about the interest not only of the United Kingdom but of the EU. It appears to me that those interests will eventually prevail.

I am afraid that I keep on getting a note saying that I have one minute to go and I keep on stretching that one minute. I have not expressly addressed all points raised by noble Lords, but perhaps I may touch on one or two. I entirely concur with the noble Lord, Lord Cromwell, that one cannot negotiate in public. We can express our intentions and our aims, but it is very difficult for us to give a running commentary about where we are on these issues any more than on other issues, but I underline our aims in this context.

The noble Earl, Lord Kinnoull, referred to the delay in the Government’s response to the report. I apologise for that. The report was followed by the general election and then by the Summer Recess. The government paper was issued on 22 August, when I believe that the noble Baroness, Lady Kennedy, was invited to take part in a briefing on the matter, but I accept that it took until the beginning of December for the response to be published.

The noble Lord, Lord Beecham, asked about progress in “discussions”. These are not discussions; these are negotiations. The noble Lord is a very experienced lawyer and knows perfectly well that one cannot have or maintain a running commentary on such matters when one is hoping to achieve consensus at the end of the day. However, we verily believe that we will achieve certainty and predictability, which, I emphasise again, is our aim.

I again thank the noble Baroness, Lady Kennedy of The Shaws, and her sub-committee for the report.