The Brexit and receivables in the UK

The result of the referendum organized by the United Kingdom in June 2016 on its future in the European Union was a shock. Our British friends finally decided to say goodbye to Europe. The consequences of this “Brexit” are uncountable and still widely unknown.

We focus here on a specific question: What will it take to enforce European judgments on English, Scottish, Welsh and Northern Ireland soils?

The current systems

After leaving the European Union, the United Kingdom will no longer be subject to the regulations produced by it, such as the Brussels I and Brussels I bis Regulations, which organize the procedure for the recognition and enforcement of judgments. Thanks to these Regulations, Europe thus provided creditors with the comfort and economy of rapid execution on the territory of a Member State about judgments obtained in the territory of another Member State.

To do so, it suffices for the creditor to obtain a favorable judgment to his case as well as a document certifying the enforceability of the judgment obtained. This judgment will then be executed in the same way as if it came from an internal authority: order to pay, appeal to a bailiff to carry out acts of seizure.

In support of these regulations, the European Union have developed several legislative tools, such as:

• The European small claims procedure concerning civil or commercial claims for amounts of less than 2000 EUR and operating on the basis of forms;

• The European Enforcement Order for uncontested claims allows for an automatically enforcement of judgments, court settlements and authentic instruments relating to uncontested claims;

• The European order for payment procedure applies to civil and commercial claims and also operates on the basis of forms. The defendant (debtor) must file opposition within 30 days if he wants to oppose;

• The rules on insolvency proceedings across EU borders apply when the insolvent entity operates in an EU country other than the country of its residence;

• The framework for mediation in civil and commercial matters allowing an out of court resolution of disputes.

The “post Brexit” procedure

As far as we know, the UK will be formally calling for Brexit in March 2017. But for a real disengagement, including disengagement from the above-mentioned rules, it will likely take several years. It is difficult to foresee now when these procedures will no longer be applicable in the UK. This will depend on negotiations between the Kingdom and the Union on matters such as jurisdiction, choice of law, reciprocal recognition, etc.

However, even if Europe and the United Kingdom do not reach this kind of agreement, all these issues will fall under the yoke of private international law and its resolutions on conflict of laws. The European creditor will therefore have to reinstate new proceedings before the British courts if he wants the judgment already obtained in the territory of one of the Member States to be enforceable in the United Kingdom. This will result in a significant loss of time and money for the European creditor already in possession of an enforceable title on European territory but ineffective elsewhere, due to lack of bilateral agreements.

Some observers consider that the most sensible first step for everybody would be for the United Kingdom to ratify the 1988 Lugano Convention as Norway, Switzerland and Iceland have already done, which provides, but in a less radical way than Brussels I, a relatively clear and rapid procedure with regard to the enforcement of judgments.

The regulation combatting late payment in business transactions

The European regulation aimed at combating late payments in commercial transactions is in fact incorporated into British law (as it is in Belgian law and the law of the other EU countries). At first sight, there is no reason for this law to be changed in the next one or two years by the British Parliament.

Conclusion

We do not really know how the UK and the Union will manage the Brexit. It looks like the negotiators themselves are shooting in the dark at present. This uncertainty is not conducive for trade between continentals and islanders because trade needs a stable framework.

It seems to us that every Belgian creditor should not drag on if he has a claim against an entity or person in the UK. As long as the regulations remain in place, the system is known and relatively effective. There is a good chance that the changes that will inevitably come will only make recovery procedures more complex as compared to the current situation.

Update 29 Oct 2018: No-Deal Brexit and claims against debtors in Great Britain.

You have a claim on a person or a business in England, Scotland, Wales, Ireland? Do you want to know more about TCM services? Visit our website or contact us!

The result of the referendum organized by the United Kingdom in June 2016 on its future in the European Union was a shock. Our British friends finally decided to say goodbye to Europe. The consequences of this “Brexit” are uncountable and still widely unknown.

We focus here on a specific question: What will it take to enforce European judgments on English, Scottish, Welsh and Northern Ireland soils?

The current systems

After leaving the European Union, the United Kingdom will no longer be subject to the regulations produced by it, such as the Brussels I and Brussels I bis Regulations, which organize the procedure for the recognition and enforcement of judgments. Thanks to these Regulations, Europe thus provided creditors with the comfort and economy of rapid execution on the territory of a Member State about judgments obtained in the territory of another Member State.

To do so, it suffices for the creditor to obtain a favorable judgment to his case as well as a document certifying the enforceability of the judgment obtained. This judgment will then be executed in the same way as if it came from an internal authority: order to pay, appeal to a bailiff to carry out acts of seizure.

In support of these regulations, the European Union have developed several legislative tools, such as:

• The European small claims procedure concerning civil or commercial claims for amounts of less than 2000 EUR and operating on the basis of forms;

• The European Enforcement Order for uncontested claims allows for an automatically enforcement of judgments, court settlements and authentic instruments relating to uncontested claims;

• The European order for payment procedure applies to civil and commercial claims and also operates on the basis of forms. The defendant (debtor) must file opposition within 30 days if he wants to oppose;

• The rules on insolvency proceedings across EU borders apply when the insolvent entity operates in an EU country other than the country of its residence;

• The framework for mediation in civil and commercial matters allowing an out of court resolution of disputes.

The “post Brexit” procedure

As far as we know, the UK will be formally calling for Brexit in March 2017. But for a real disengagement, including disengagement from the above-mentioned rules, it will likely take several years. It is difficult to foresee now when these procedures will no longer be applicable in the UK. This will depend on negotiations between the Kingdom and the Union on matters such as jurisdiction, choice of law, reciprocal recognition, etc.

However, even if Europe and the United Kingdom do not reach this kind of agreement, all these issues will fall under the yoke of private international law and its resolutions on conflict of laws. The European creditor will therefore have to reinstate new proceedings before the British courts if he wants the judgment already obtained in the territory of one of the Member States to be enforceable in the United Kingdom. This will result in a significant loss of time and money for the European creditor already in possession of an enforceable title on European territory but ineffective elsewhere, due to lack of bilateral agreements.

Some observers consider that the most sensible first step for everybody would be for the United Kingdom to ratify the 1988 Lugano Convention as Norway, Switzerland and Iceland have already done, which provides, but in a less radical way than Brussels I, a relatively clear and rapid procedure with regard to the enforcement of judgments.

The regulation combatting late payment in business transactions

The European regulation aimed at combating late payments in commercial transactions is in fact incorporated into British law (as it is in Belgian law and the law of the other EU countries). At first sight, there is no reason for this law to be changed in the next one or two years by the British Parliament.

Conclusion

We do not really know how the UK and the Union will manage the Brexit. It looks like the negotiators themselves are shooting in the dark at present. This uncertainty is not conducive for trade between continentals and islanders because trade needs a stable framework.

It seems to us that every Belgian creditor should not drag on if he has a claim against an entity or person in the UK. As long as the regulations remain in place, the system is known and relatively effective. There is a good chance that the changes that will inevitably come will only make recovery procedures more complex as compared to the current situation.

Update 29 Oct 2018: No-Deal Brexit and claims against debtors in Great Britain.

You have a claim on a person or a business in England, Scotland, Wales, Ireland? Do you want to know more about TCM services? Visit our website or contact us!