The Changing Face of Cross-border Dispute Resolution after Brexit

Updated 22.07.2021

On the evening of 31 December 2020, the EU (Withdrawal) Act 2018 came into effect which rescinded all EU law that was currently effective in the UK with the exception of a  considerable amount of EU law that was drafted into UK law as “retained EU law.”

However, EU law could not be maintained forever in the same manner and there would be a need to deviate; the European Union (Withdrawal) Act 2018 made provision for the Supreme Court to overturn the EU retained law if necessary, as it does currently in the courts of England and Wales, with additional powers to off-set any long delays should the deviation from retained EU law prove to be protracted in certain circumstances.

Given the lack of clarity surrounding the UK's exit from the EU it became imperative for alternative solutions to be sought to resolve disputes and prevent a situation where controversies remain unsettled for extremely lengthy periods of time resulting in an adverse impact on a business.  

Giambrone’s corporate and commercial litigation team, commented “businesses need as swift a resolution as possible to any disputes in the current circumstances.  Mediation offers a way of reaching a settlement as well as avoiding the legal costs of litigation.”  and further remarked, “it is all parties’ best interests to deal with disputes as quickly as possible and there is very little to lose in trying to negotiate a settlement.”

At the moment some aspects of the route to cross-border dispute resolution are still unclear; the UK government has set out plans to replace the Brussels Recast Regulation, which currently governs the recognition of contractual agreements relating to jurisdiction and the enforcement of judgments.  The requests for permission to join The Lugano Convention have not been granted.  The Lugano Convention 2007 is an EU negotiated international treaty with Iceland, Norway and Switzerland and also Denmark separately (because it has an opt-out), aimed at clarifying jurisdiction in cross-border civil and commercial disputes, and enforcing cross-border judgments. For Britain to be accepted EU Member States would have to agree to the UK’s membership and this has apparently not been welcome to all EU Member States.  Michel Barnier’s rhetorical question in a speech not long before Brexit was  "Do we really want the UK to remain a centre for commercial litigation for the EU, when we could attract these services here?" no doubt focussed the minds of a number of the Member States to think carefully about granting Britain access to The Lugano Convention. 

The European Commission issued its assessment of the UK's application to join the Lugano Convention on 4 May 2021 and recommended that the EU does not approve UK accession to the Lugano Convention on the basis that the UK is not a member of the European Economic Area or the European Free Trade Association.  

The fall-back position for the UK, if there is no bilateral arrangement with the UK and it is unable to join the Lugano Convention, is to rely on The Hague Convention on Choice of Courts Agreements. 

There is an alternative to litigation to settle contentious disputes, Giambrone’s corporate and commercial litigation team frequently and very successfully, employ mediation when resolving disputes and point out it is often the case that the parties involved in a dispute become polarised and need to be assisted to reach a pragmatic solution that can be accepted by everyone which allows them to get back to business without the distraction of time and money being directed to the legal dispute.

In the current coronavirus induced global economic climate every business needs to focus on generating income and keeping going. Regardless of whether a dispute relates to unpaid invoices or a breach of contractual terms and conditions, businesses need to know what the effect the dispute will have on the business function in terms of financial impact to enable them to be able to address the consequences and return to focusing on doing business without the distraction of a legal issue. Giambrone’s corporate and commercial litigation team has enjoyed a considerable number of impressive successes when resolving contentious disputes by way of mediation due to their diligence, tenacity and determination to provide the best outcome for our clients.

For more information about dispute resolution by way of mediation please click here