Draft Civil Jurisdiction and Judgments (Amendment) (EU Exit) Regulations 2019

Lucy Frazer Excerpts

Tuesday 5th February 2019 General Committees

[The Parliamentary Under-Secretary of State for Justice (Lucy Frazer)]

I beg to move,

That the Committee has considered the draft Civil Jurisdiction and Judgments (Amendment) (EU Exit) Regulations 2019.

The draft regulations form part of our ongoing work to ensure that if the UK leaves the EU without a deal, the necessary statutes will be in place. If Parliament approves the withdrawal agreement, which includes an implementation period, and passes the necessary legislation to implement the agreement, the Government will defer the coming into force of the draft regulations until the end of that implementation. If a deal on our future relationship is reached, we envisage that they will be revoked entirely. They will simply cover the situation if there is no deal at all.

The draft regulations will make changes to the rules in England and Wales, in Northern Ireland and in Scotland to determine which courts should have the power to hear a case with a cross-border element that could involve the EU and the relevant European Free Trade Association countries—Norway, Switzerland and Iceland. They will also change the rules on how to ensure that any judgments or decisions can be enforced across the EU and the relevant EFTA states.

Perhaps it would be helpful if I explained the application of the EU regulations that we seek to replace. The principal measure that relates to civil and commercial law is the Brussels Ia regulation. The Brussels regime provides clear and reciprocal rules on jurisdiction in civil and commercial matters to determine which court hears a cross-border case. Its application is mandatory and leaves no discretion for courts to act otherwise. For example, if a UK consumer or business has a dispute with a party in a state that is a member of the EU or is a party to the Lugano convention, there are clear rules to determine which court in which jurisdiction should hear the case. This prevents the risk of parallel proceedings, or more than one court hearing the case.

Secondly, there is almost automatic recognition and enforcement of the judgments of one participating state in another. If a business successfully sues another business in one state, it can ensure that it enforces the resulting judgment where it needs to without going through costly and time-consuming additional processes. That is possible because all participating states must apply uniform rules of jurisdiction and can trust that jurisdiction was assumed properly and appropriately.

The Brussels regime operates almost entirely on a reciprocal basis. Its effectiveness is founded on mutual co-operation between states: countries respect the jurisdiction of each other’s courts and recognise and enforce each other’s judgments. However, with some limited exceptions, including consumer and employment cases, the Brussels rules do not apply if the defendant in a dispute is domiciled outside the EU. In such cases, the EU member states and the Lugano parties—Norway, Switzerland and Iceland—apply their own national rules on cross-border matters.

What will change if we leave the EU without a deal? In those circumstances, the EU regime for determining these matters will simply cease to apply to us. The reciprocity in the EU regime that I have described can no longer apply to relations between EU member states and the UK after exit, nor will they apply between the Lugano parties and the UK. Furthermore, there are no unilateral actions that the UK can take to compel the EU as a whole to continue to apply the reciprocal jurisdictional rules or to enforce judgments. We therefore need to legislate now to provide clarity about how the UK will determine whether it has jurisdiction in a civil and commercial case and when UK courts will recognise and enforce judgments from EU countries. However, our legislation cannot determine what rules the EU will apply; that will be down to member states’ own national laws.

The Government’s response, which is set out in the draft regulations, is to revert—with some limited exceptions—to the rules on jurisdiction and the recognition and enforcement of judgments that currently apply to cross-border disputes to which the Brussels regime does not apply, namely disputes that involve parties from the UK on the one hand and parties from countries outside the EU and the Lugano convention on the other. The draft regulations are not creating new policy; they are transitioning us to a well-developed and understood set of rules that will provide an effective framework for UK courts to work with and will take into account the lack of reciprocity in the area.

There are a few exceptions to this general approach. Importantly, existing international agreements such as the rules of The Hague convention of 2005 on choice of court agreements would continue to apply, as the UK is acceding to this as a contracting state. This will be brought into UK law, post EU exit, by a separate SI that has been subject to the negative procedure, which means that UK courts would take jurisdiction whenever there is a valid choice of court agreement to which the convention applies. We would also readily recognise and enforce the judgment of a foreign court that is validly selected under an agreement. Courts of other contracting states to the convention would equally recognise and enforce the judgment of a UK court to which the convention applies.

We have sought, where we can, to maintain the jurisdictional protections for UK consumers and employees that are contained in the Brussels regime. These rules are not restricted to EU-domiciled defendants, so we can retain much of the consumer and employee-friendly approach of the Brussels regime while restating them for UK-based consumers and employees, which will largely take away their need to sue abroad in such cases and the expense and difficulty that it brings.

This instrument is necessary to fix the statute book in the event of a no-deal exit from the EU. We have assessed its impact and published a full impact assessment. Broadly, we have concluded that although in certain respects the common law might operate less efficiently than the Brussels regime, to which the UK is a party as a result of EU membership, only negligible costs would arise from this SI, relative to the alternative of leaving legislation on the statute book that would cease to operate effectively in the absence of reciprocity after the UK has left the EU. The Government’s view is that removing deficient retained EU law from domestic law would clarify the rules that apply to determining jurisdiction and post-EU exit recognition and enforcement of judgments. Our approach has been led by engagement with the sector, particularly the Law Society, the Bar Council, the Brexit Law Committee and others.

As I have set out, there would be deficiencies in retained EU law that implements the instruments of the Brussels regime because of a lack of reciprocity should we leave the EU without a deal. This SI fixes those deficiencies and establishes a practical set of rules for dealing with cross-border disputes in civil and commercial matters in such a scenario.

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[Lucy Frazer]

I thank the Front-Bench Members for their interesting and important submissions. I recognise what the hon. Member for Bolton South East said— that this draft instrument has to be introduced in the circumstances—and I underline the importance of the recognition of judgments across borders.

To answer a couple of the hon. Lady’s points, we published the impact assessment last Monday. On her specific point about cases already before the court, there is a saving provision to ensure that the UK will deal with those cases under the Brussels regime, so far as that is possible. She also highlighted the Lugano convention. I assure her, as we have said at all stages of this process and in relation to the deal discussions, that the UK Government absolutely want to remain a signatory to the convention; it is one of our priorities. We have spoken to the other states party to that convention, whose agreement we will need. However, the EU also has to sign up to that, and we have raised the matter with the EU.

The hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East raised several matters relating to Scotland, including whether there had been consultation on this aspect of Brexit. I highlight that our Brexit Law Committee comprises members of all the key stakeholders in this area—the Law Society, the Bar Council, TheCityUK and several specialists—who we have consulted for their advice and opinions. I have held roundtables with them throughout this process, as have my officials.

I assure the hon. Gentleman that we have regularly consulted the devolved Administrations throughout this process. I was at an interministerial meeting with all the devolved Administrations in Edinburgh on Thursday last week to discuss this very subject. I was pleased that the Scottish Minister for Parliamentary Business thanked my officials for their co-operative working with the Scottish Government on this matter, as well as on many others. The hon. Gentleman also mentioned the Law Society of Scotland, which I have spoken to several times to update it on what we are doing.

If the hon. Gentleman would like to raise any technical matters, I am very happy to discuss those with him. However, for those reasons, I commend the draft regulations to the Committee.

Question put and agreed to.