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Litigation and Arbitration / Restructuring and Insolvency Commentary 1-2016

Uncertainties arising from Brexit in relation to international litigation and corporate restructuring and insolvency matters

07/08/2016
Commentaries

This commentary describes some of the main issues and uncertainties that the United Kingdom’s exit from the European Union will bring, concerning matters such as choice of court agreements, recognition and enforcement of judgments, choice of law and corporate restructuring and insolvency proceedings.

1. Introduction
 
Article 50.2 of the Lisbon Treaty provides that a Member State which decides to withdraw from the European Union must notify the European Council of its intention. The Union will then negotiate and conclude an agreement with that
State setting out the arrangements for its withdrawal, taking account of the framework for its future relationship with the Union.
 
Additionally, the terms of article 50.3 determine that the Treaties will cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification referred to in paragraph 2, unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period.
 
Therefore, once the United Kingdom has officially notified the European Council of its decision to withdraw, the relevant negotiations will start and from the entry into force of the withdrawal agreement, or failing that, after two years (or after the end of the extended period if one has been decided), EU legislation will cease to apply between the Member States and the United Kingdom; in particular, for the purposes of this commentary, the existing instruments on judicial cooperation in civil matters.
 
Several different scenarios could unfold from this; for example: (i) in the withdrawal negotiations new instruments may be negotiated to replace the current EU instruments, the contents of which cannot be predicted at this stage; (ii) what may also happen is that no provisions will be laid down in this respect and regulatory gaps (lacunae) may arise with the associated cross-border problems of all types2; or (iii) the United Kingdom may accede to preexisting international instruments, such as the 2007 Lugano Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, or the 2005 Hague Convention on choice of court agreements.
 
2. Choice of court agreements designating courts in the United Kingdom and recognition and enforcement of judgments rendered in this country
 
3. Choice of law clause in favor of the law in the United Kingdom
 
4. Restructuring and Insolvency proceedings in the courts of the United Kingdom
 
5. Arbitration

 

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