Brexit and Private International Law (Part 1 of 2)

NL Law
EU Law

Since 1 January 2021, EU regulations simplifying cross-border litigation no longer apply in relation to the UK and – in most cases – to parties based in the UK. While some may have expected the way ahead to have cleared by now, the opposite is in fact true: at the time of writing this blog, the EU and UK (or the Netherlands and the UK) have not agreed on any framework that replaces the EU legislation no longer applicable to the UK.

This two-part blog explores the implications of Brexit for litigation against UK parties in Dutch courts. We give an overview of the status quo and uncertainties on four key areas of private international law (“PIL”). In Part 1, we focus on (i) service of judicial documents and (ii) jurisdiction of Dutch courts. In Part 2, we focus on (iii) enforcement of UK court judgments in the Netherlands and (iv) applicable law. In Part 2 we will also give a brief overview of other EU PIL instruments that have ceased to apply to the UK from 1 January 2021.

We will take a Netherlands-centred view and focus only on civil and commercial matters. We note that the UK government opted for a clean-cut approach, terminating the application of any EU PIL in the UK after 1 January 2021.

I. Service of legal documents on UK parties

Post-Brexit, a party who aims to initiate proceedings against a UK-based party in the Dutch courts, can no longer serve judicial documents via the convenient and relatively fast route of the EU Service Regulation. Instead, the The Hague Service Convention of 1965 applies. Under that Convention, legal documents are exchanged between central (judicial) authorities, and are served on the defendant in accordance with local rules. By contrast, the EU Service Regulation provided for a direct, decentralised service circumventing the central authorities. In practice, completing service via the central authority route will likely take several weeks, if not months. This may be inconvenient, as typically a case cannot proceed unless the claimant can prove that service has been completed.

Parties may avoid international service by agreeing, to an agent for service (domiciliekeuze) in the Netherlands, in advance and in writing. The Dutch Supreme Court previously held, in Nieuwersteeg v. Colonia Versicherungs AG, ECLI:NL:HR:1996:ZC1982, that if documents intended for a defendant domiciled outside of the Netherlands have been properly served on an agent in the Netherlands, the Convention does not apply and additional international service is not required.

The above only applies to first instance proceedings. The practice of service of documents initiating an appeal on the lawyer that represented the other party in first instance (Section 63 of the Dutch Code of Civil Procedure) remains unaffected by Brexit.

II. International jurisdiction of Dutch courts

Pre-Brexit, Dutch courts determined their international jurisdiction in cases involving UK-based parties in accordance with the comprehensive framework of the Brussels Regulation (recast) no. (EU) 1215/2012 (“Regulation 1215/2012”). Since Brexit, the jurisdictional landscape has become more fractured.

Most heads of jurisdiction in Regulation 1215/2012 no longer apply to UK parties, since their application is limited to parties domiciled in an EU Member Sate. Some heads of jurisdiction remain unaffected by Brexit, such as choice of court (see below) and exclusive jurisdiction in, for example, proceedings concerning rights in rem in immovable property or immovable property located in the Netherlands. As from 1 January 2021, Dutch courts will fall back on the rules of Dutch PIL, unless exceptions from Regulation 1215/2012 or other PIL instruments apply.

Choice of court

Notably, Brexit will likely not affect choice of court clauses, in either existing or future agreements. If the parties have agreed to submit their dispute to the jurisdiction of a Dutch court, the court can establish its competence on the basis of article 25 of Regulation 1215/2012. This provision applies “regardless of the domicile of the parties”. Since Brexit, Dutch courts have already established their jurisdiction over UK parties on this basis, see for example this judgement of the Netherlands Commercial Court of 11 March 2021 (ECLI:NL:RBAMS:2021:990).

Similarly, Dutch courts can establish jurisdiction over UK parties based on choice of court clauses under the framework of the The Hague Choice of Court Convention of 2005, to which both the Netherlands and the UK are a party. This Convention confers jurisdiction to the courts designated in an exclusive choice of court clause.

This Convention’s application is subject to two caveats. First, the The Hague Choice of Court Convention applies only to choice of court agreements concluded after its entry into force. Brexit prompts debate about when the convention entered into force in the UK. The convention entered into force for Member States of the EU (at the time including the UK) on 1 October 2015, but after its withdrawal from the EU, the UK ratified the Convention as a separate member on 28 September 2020, after which the Convention entered into force (again?) in the UK on 1 January 2021. Ultimately, courts will have to decide on this uncertainty and meanwhile, there is a risk that courts may only uphold choice of court agreements between a UK and non-UK party on the basis of the The Hague Choice of Court Convention if the agreement was concluded on or after 1 January 2021. Parties may opt to mitigate the risk by confirming their choice of court arrangement in writing, e.g. an addendum to the original agreement. Second, the The Hague Choice of Court Convention applies only to exclusive choice of court agreements, i.e. agreements designating the courts of one specific member state (or one of more courts within that state), excluding all other courts. Other choice of court clauses, for example clauses designating the courts of multiple member states or asymmetrical forum clauses, are excluded from the Convention’s scope.

Absent a choice for Dutch courts, courts will assess jurisdiction over a UK party through reference to Dutch PIL, which is largely identical to Regulation 1215/2012.

Back to the future: Lugano Convention

Since Brexit was announced, commentators have suggested that the comprehensive PIL framework of the Lugano Convention of 30 October 2007 (“Lugano Convention”) could become applicable in relations between EU and UK parties. The rules in the Lugano Convention are substantially similar to the framework of Regulation 1215/2012, and as such, the Lugano Convention is seen as an attractive framework for future PIL cooperation between the EU and UK. The Lugano Convention concerns both court jurisdiction and enforcement of judgments between contracting states.

At present, the EU, Switzerland, Norway and Iceland are parties to the Lugano Convention. The UK applied to become a party to the Lugano Convention on 8 April 2020. Accession to the Convention requires unanimous consent from all other parties. So far, all parties have consented to the UK’s accession, except the EU.

In a recent Communication to the European Parliament and Council, the European Commission recommended to reject the UK’s accession. In short, the European Commission’s position is that the framework of the Lugano Convention should only extend to third countries with a particularly close regulatory integration with the EU, such as Norway and Iceland via the Agreement on the European Economic Area (EEA). As the European Commission considers the UK to be a third country “without a special link to the [EU] internal market”, it finds that the appropriate framework for PIL cooperation are the various international Hague Conventions, and not the Lugano Convention, which offers third countries that are linked to the internal market the benefit of the convenient Lugano Convention framework for recognition and enforcement of judgments. While the ultimate decision on the UK’s accession lies with the Council (and thus indirectly, the EU Member States), the Commission’s recommendation makes it more uncertain and perhaps unlikely that the Lugano Convention will play the significant post-Brexit role which commentators envisaged.

Or back to the past: revival of the Brussels Convention?

Finally, it has been argued that post-Brexit, the Brussels Convention of 1968 (“Brussels Convention”) would once again be applicable to PIL matters between the UK and EU Members States that are party to that Convention. The Brussels Convention is an international treaty (not EU legislation) between 15 of the pre-2004 EU Member States (including the UK), that has since been superseded by EU legislation. It governs both international jurisdiction and the recognition and enforcement of judgments. Some commentators have argued that since the Brussels

Convention was merely suspended and was never terminated nor ever fully replaced by EU legislation, it would once again apply as EU Regulation 1215/2012 no longer applies to the UK. Whether these arguments have merit, is ultimately a matter of public international law. At present, both the UK and EU Commission have indicated that the Brussels Convention has no role after Brexit, rendering it unlikely that it will play a significant role (if any) in the post-Brexit PIL landscape.

Given the fact that materially identical heads of jurisdiction are available in Dutch PIL as in Regulation 1215/2012, the practical value of the revival of the Brussels Convention is limited within the context of jurisdiction. However, with respect to recognition and enforcement of UK judgments in the Netherlands, this is an entirely different matter; this will be the subject of Part 2 of this blog.