One of the implications of Brexit is the way Dispute Resolution and the jurisdiction of the European Court of Justice (ECJ) will pan out in 2021. We highlight the good, the bad, and some practical tips.
If you have a watertight commercial contract, chances are that your legal team and you would have addressed the necessary dispute resolution mechanisms. In case things turn sour, you do have ways of handling it right?
Let’s get the bad out of the way shall we? If the other party/parties to your contract is domiciled outside of the UK, in an EU member state, and you have a jurisdiction clause in favour of the courts of England & Wales, you would have to ensure that your contract contains a clause obliging your counter-party to appoint a process agent in this jurisdiction to accept legal proceedings.
The good news is dispute resolution proceedings now be it mediation or arbitration, would function more like any international arbitration so similar guidelines would follow. Also, since The United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (The New York Convention) is ratified also by EU states, arbitration mechanisms would still be similar.
So what does it mean for you? We would advise you spend a bit of resources to get your key contracts scrubbed if possible. Chances are if have had these contracts drafted in the last few years, your legal servicing personnel should have built them in.
Previously if you had a dispute with a party/parties in another EU member state, the ECJ would have jurisdiction over it depending on the seat of dispute being established. The bad news? With Brexit, the courts of England & Wales have jurisdiction so if your counter-party is in a EU state, you would have to come to an agreement, or tap on contractual provisions to decide seat in which dispute is being brought. But that comes with a good news as well. The silver lining is that the directions given the English Courts are enforceable directly, without a further need for ratification locally.
A practical tip? As ever in a commercial setting, do see if there are other methods of resolving the dispute either via commercial negotiation, by dispute resolution mechanisms, before you seek the courts for a just resolution. Chances are by the time it gets to a court-led dispute resolution process, you would have exhausted the options, but these are key things to keep in mind as we go into the next phase Post-Brexit.
In summary key tips :
- Scrub down your key contracts, especially for non-arbitration mechanisms built in.
- Ensure clauses for counter-party to appoint process agent in same jurisdiction is included in your key contracts.
- Know that English courts have jurisdiction and address seat of dispute in your contracts.
If you are a company moving into the UK, the benefit of all of this is that you could get these legal mechanisms built in easily since the way ahead is clearer. UKSGBridge will be happy to put you in touch with our legal partners.
This post has been written by Karthikayini Senthilkumaran, Co-Founder and UK Lead for EkkBaz Pte Ltd, for UKSGBridge Limited, and represents her views only. The copyright for this post subsists with UKSGBridge Limited, and parts or the whole of this post may be reproduced with permission from UKSGBridge Limited.