The low down
Put up-Brexit, purchasers have nonetheless been in a position to implement English court docket judgments within the European Union. However ‘it has simply been extra complicated, taken longer and been extra pricey’. Enterprise remains to be booming, nonetheless, for London’s internationally centered dispute decision legal professionals. Class actions are on the rise, as are disputes on the intersection of ‘tech and shoppers’. Litigation funding continues to facilitate claims the place claimants would in any other case lack the mandatory backing. In the meantime, the UK’s accession to the Hague 2019 Conference will enhance enforcement. So who’s bearing the price of all this? Reply: the litigating events.
Accession to the EU’s Lugano Conference was central to UK aspirations to restrict harm to the Metropolis’s skilled economic system. Lugano supplies a reciprocal enforcement regime. So when the European Fee rejected the UK’s software in Could 2021, it was a blow to London’s pre-eminence as a dispute decision centre.
There are nonetheless questions round whether or not the UK ratifying the Conference on the Recognition and Enforcement of Overseas Judgments in Civil or Business Issues (Hague 2019) will adequately fill the hole the Lugano rebuff left in UK technique. However it’s usually seen as a transfer in the best route.
And even earlier than Hague 2019, UK litigators are as busy as ever, partly as a result of UK laws and European directives are driving an exponential and dramatic rise in US-style class actions. These allow people affected by the actions of massive corporates to hunt redress whereas fuelling the quickly rising and extremely worthwhile litigation funding funding market.
New conference for enforcement
‘Brexit made the popularity and enforcement of civil and industrial UK judgments within the EU considerably extra complicated and cumbersome than it was earlier than,’ observes Jacques Sivignon, a industrial litigation associate in Dechert’s Paris workplace. Within the absence of treaties (excluding the 2005 Hague Conference on Selection of Court docket Agreements), Sivignon says, ‘recognition and enforcement of UK judgments within the EU are ruled by the nationwide guidelines of the member state the place the enforcement is sought, which might impose extra restrictive situations than when a reciprocal association for the enforcement of judgments exists’.
Hague 2019 will definitely assist. Sivignon says: ‘The latest ratification by the UK of the Hague 2019 Conference in issues to which the EU is a celebration will definitely facilitate the worldwide circulation of UK civil and industrial judgments that are within the scope of the conference inside the EU.’ This, he provides, ‘ought to pace up the proceedings, simplify the method by offering a singular framework relevant in all EU member states and thereby enhance predictability’.
The Home of Lords Worldwide Agreements Committee explains in its newest report, Scrutiny of worldwide agreements: 2019 Hague Conference: ‘Hague 2019 is a Non-public Worldwide Regulation Settlement. Such agreements present a authorized framework for resolving cross-border disputes… by guaranteeing companies have the arrogance to enter into cross-border contracts figuring out there are efficient mechanisms to acquire redress.’
That is notably necessary for the reason that UK was excluded from the reciprocal preparations for implementing cross-border judgments below Lugano.
‘Hague 2019 supplies reciprocity in relation to the popularity and enforcement of all judgments that fall inside its scope’
Louise Lanzkron, Chicken & Chicken
‘It is a welcome improvement for companies searching for to implement overseas court docket judgments within the English courts and for litigants searching for to implement judgments in international locations which might be already signatories, together with these within the EU,’ confirms Chicken & Chicken dispute decision information and improvement lawyer Louise Lanzkron. ‘Though it won’t change the reciprocity the UK loved pre-Brexit, it is going to go a way to make sure larger authorized certainty, assist streamline the authorized course of and scale back complexity and prices, as it is going to present for recognition and enforcement in a contracting state with no assessment of the deserves.’
Lanzkron explains that Hague 2019 is an enchancment on the preparations instantly post-Brexit when the UK acceded to the 2005 Hague Selection of Courts Conference (HCCC). The latter supplies for the popularity and enforcement of judgments in signatory states (together with the EU), however is restricted to judgments emanating from unique jurisdiction clauses.
Hague 2019, she stresses, ‘is broader in its software because it supplies reciprocity in relation to the popularity and enforcement of all judgments that fall inside its scope (see beneath) together with these which outcome from non-exclusive or uneven jurisdiction clauses. This can imply that events will probably be much less hamstrung by the kind of jurisdiction clause they negotiate’.
Nonetheless, Hague 2019 nonetheless has extra limitations than Lugano. First, says Lanzkron, it solely applies to the courts of England and Wales, and never Scotland and Northern Eire. Second, whereas it applies to judgments on the deserves in civil and industrial instances, it doesn’t apply to interim measures or insolvency, mental property, defamation and privateness, and administrative regulation issues. Third, in contrast to Lugano and HCCC it doesn’t regulate the allocation of jurisdiction between the courts of various states – that means it won’t deal with the elevated dangers of disputes about jurisdiction similar to the issue of parallel proceedings. And at last, when it comes into power for the UK on 1 July 2025 it is going to solely apply to proceedings began after that date.
General, although, the advantages of stability and certainty far outweigh any foreseeable issues, restoring the UK to shut to its pre-Brexit place with out rejoining the Single Market.
London is the place for me
There have been issues that Brexit and the UK’s exclusion from the Lugano Conference would harm London’s place as a world hub for dispute decision. However international agency Baker McKenzie has not seen multi-jurisdictional litigation desert the UK courts.
‘After we first left the EU, there was a sense that perhaps firms wouldn’t see England and Wales as a superb place to be litigating,’ says dispute decision associate Francesca Richmond. ‘However whereas we now have had some purchasers think about their dispute decision clauses, we haven’t seen any huge shifts, and Hague 2019 will assist alleviate the uncertainty of implementing disputes.’
She provides: ‘On stability, Brexit hasn’t precipitated a mass exodus of litigation and though it would assist that we now have a authorities with a mindset that reveals re-engagement, there was no suggestion that England and Wales isn’t a centre of excellence that may be trusted for enforcement.’
Her colleague, solicitor-advocate Ben Ko, agrees: ‘The enforceability of English judgments was all the time an element when negotiating the jurisdiction clause of a contract – the place disputes can be heard. However there are additionally different issues like the place belongings are positioned, and the massive quantity of capital flowing by London implies that it’s nonetheless first alternative for plenty of worldwide firms. The standard of judges, the pace at which you get a judgment, routes to attraction, and conducting instances in English are all explanation why London was not affected by Brexit in the best way that some could have anticipated.’
Chicken & Chicken dispute decision information and improvement lawyer Louise Lanzkron provides: ‘Put up-Brexit, purchasers have nonetheless been in a position to implement English court docket judgments within the EU, it has simply been extra complicated, taken longer and been extra pricey. This has clearly been irritating for them and so the ratification of the Hague Judgments Conference may be very welcome.’
Ben Roe, lead information lawyer for Baker McKenzie’s international disputes and compliance group, provides: ‘Typically individuals neglect that the Lugano Conference was a reciprocal association that allowed EU firms to implement in London as properly, and due to the quantity of worldwide capital that flows by the Metropolis, London has all the time been an necessary enforcement centre, so maybe there was an inclination to focus a bit an excessive amount of on the perceived disadvantages for the London market, when really [enforcement] flows in each instructions.’
Competing courts
Whereas London remains to be a world disputes vacation spot post-Brexit, it has seen extra competitors from courts in Europe and past which have centered on replicating a few of London’s key benefits.
Baker McKenzie dispute decision associate Francesca Richmond says: ‘The Dutch courts launched an English-speaking help community and a industrial court docket, and different jurisdictions have launched procedural reforms to make it simpler to deliver class actions or get disclosure, which is one thing that English courts used to have over everybody else. So whereas enforcement was one in every of many elements, we’re seeing competitors throughout the complete vary, and it’s important for English courts to maintain that in thoughts. And courts work together with one another to see what they need to be enhancing as a way to declare that they’re a litigation-friendly jurisdiction.’
And EU industrial courts will not be London’s solely competitors. The previous few years have seen the fast globalisation of worldwide dispute decision, which has reshaped the EU and international litigation panorama, and elevated alternatives for UK judges and litigators.
Baker McKenzie solicitor-advocate Ben Ko factors out that the worldwide industrial courts in Dubai, Abu Dhabi and Singapore are modelled on the English authorized system: ‘They mannequin their guidelines on the English procedural guidelines. They import English regulation. And the judges are all former senior English or Commonwealth judges.’
The truth that the US is a world influencer in litigation is not any extra obvious than within the exponential enhance at school actions within the UK and Europe previously 5 years. The UK is main some EU jurisdictions in direction of a US-style system, the place redress is each accessible and a worthwhile funding.
Class actions
Kenny Henderson, disputes associate at CMS, specialises in multi-jurisdictional high-stakes disputes, appearing on each the claimant and defendant facet. CMS lately revealed its European Class Motion Report 2024, a data-driven analysis research on the expansion of sophistication actions and their focus throughout European jurisdictions.
Class actions within the EU and the UK have elevated enormously, notably competitors class actions, since 2015 when the UK launched a US-style opt-out mechanism, which is when litigation funders appoint a category consultant who acts for everybody affected, except they select to decide out.
The standard European mechanism is opt-in, the place claimants select to affix group proceedings. ‘The flip from opt-in to opt-out is a paradigm shift that has huge penalties. For instance, whereas knowledge breach claims are nonetheless opt-in, even huge breaches have comparatively few claimants as a result of individuals don’t enroll,’ says Henderson. ‘Decide-out reverses that, which is why there are greater than 500m individuals concerned in competitors class actions when the UK has a inhabitants of 67m – as a result of we is perhaps concerned in a number of class actions with out having been requested.’
‘There’s been reform throughout the EU to require all member states to introduce class actions, however most states have most well-liked an opt-in regime. However opt-out is a gateway to getting class actions shifting’
Kenny Henderson, CMS
Class actions will profit from Hague 2019. Richmond explains: ‘US-style class actions began within the competitors area and claimant companies are eager to see that expanded into client instances, particularly client tech. The tendency is to deliver giant client instances searching for small damages you wouldn’t in any other case litigate. There are additionally provide chain, ESG [environmental, social and governance] instances, round issues like greenwashing.’
The opt-out regime is spreading throughout Europe, Henderson notes: ‘There’s been reform throughout the EU to require all member states to introduce class actions, however most states have most well-liked an opt-in regime. However opt-out is a gateway to getting class actions shifting, and we’re more likely to see extra of it.’
He continues: ‘The shift from opt-in to opt-out is big. It’s not simply within the UK – the Netherlands and Portugal have moved too. The litigation atmosphere in Europe is turning into extra just like the US.’
The altering regulatory atmosphere in Europe helps this. ‘Different issues taking place in Europe are growing litigation danger,’ he provides. ‘If I used to be present laws from a claimant lawyer perspective, I might assume I can now deliver a great deal of claims because of the altering regulatory atmosphere. The Product Legal responsibility Directive is shifting the burden of proof to the defendant. The Consultant Actions Directive requires member states to have minimal procedural requirements for sophistication motion.
‘So each nation in Europe is meant to have a workable system of collective redress. It hasn’t been applied in every single place, however it’s a call by European legislators to facilitate litigation. They name it entry to justice, which appears like a superb factor, however the query is whether or not this actually provides entry to justice or simply enriches funders. No one argues in opposition to entry to justice; the query is whether or not the modifications are actually delivering entry to justice. It’s a nuanced and troublesome space to grapple with.’
Henderson says class motion regimes are a mirrored image of the broader authorized methods: ‘The broader dilemma for governments is between a US-style class motion system the place it’s very straightforward to deliver a category motion and shoppers are mechanically signed up, which has some benefits, or would you like a system that’s barely harder however extra business-friendly? Jurisdictions all over the world however notably inside Europe try to resolve the place they need to be on that spectrum. The UK is creeping in direction of a US-style regime, whereas different EU jurisdictions have been extra cautious.’
Richmond highlights one other key pattern in EU disputes: the rise in litigation on the intersection between client and know-how regulation. It’s pushed by legislative modifications, and selections by competitors and client authorities which have inspired claimant companies to facilitate class actions.
‘At the very least a 3rd of sophistication actions filed on the Competitors Attraction Tribunal (CAT) final 12 months have been abuse of dominance instances in opposition to the large tech platforms, quite than basic cartels and client points,’ observes Richmond. ‘As a substitute, they’re specializing in behaviours a regulator would possibly have a look at. For instance, that Fb misused customers’ knowledge, and they’re going by the courts in the intervening time, and we will see if that offers rise to a category motion, and what it’s value.’ (Meta, proprietor of Fb, was fined in Eire for knowledge breaches. It has known as the superb ‘unjustified’ and stated it intends to attraction the regulator’s determination.)
AI drives collaboration
Ko at Baker McKenzie identifies a optimistic improvement that’s pushed by the shared problem of quickly advancing know-how. ‘A transparent pattern is growing cooperation to fulfill a Twenty first-century problem,’ he says. ‘The English courts, and those that set the principles are contemplating whether or not the procedural guidelines are enough to bear in mind the rise in using AI within the litigation course of, which is a query for each court docket in each jurisdiction.’
Ko continues: ‘The Standing Worldwide Discussion board of Business Courts [SIFoCC], which is a gathering of the heads of business courts, lately met in Qatar, and put out a number of useful materials on enforcement and using know-how in court docket processes.’
Simply final week, the federal government signed the Council of Europe Framework Conference on Synthetic Intelligence, the primary legally binding treaty overlaying using AI methods.
Geopolitical tensions
Wars in Ukraine and the Center East are fuelling geopolitical pressure and disrupting provide chains. This implies purchasers are struggling to ship on their contractual obligations.
‘We’re seeing an uptick in sanctions litigation which is difficult for our purchasers, who’ve to verify they don’t breach sanctions, impositions or cash laundering guidelines,’ Ko says. And typically the lawyer is left in an unenviable place between the consumer and the regulator.
This could create difficulties with counterparties, Ko notes: ‘In a single dispute I’m working for a significant financial institution, they usually must get a licence to maintain the particular person’s account open, similtaneously coping with a legit criticism. It’s an enormous a part of our apply and there’s so much to take care of for our purchasers who need to preserve industrial relationships – they don’t need to break contracts if they will keep away from it.’
Geopolitical elements are additionally affecting the litigation course of. ‘I’ve acted in instances the place an knowledgeable witness has needed to resign as a result of their agency had determined to not do enterprise with Russia,’ Ko provides. ‘This had nothing to do with the case. It’s exterior political elements disrupting the method, and courts recurrently must grapple with [legal] questions the place a celebration can’t get justice due to their lack of ability to participate in a dispute on a good and equal foundation.’
Further-territorial laws
Past collective redress, extra-territorial laws popping out of the EU can be growing the danger of litigation for companies. Henderson observes: ‘The Company Sustainability Due Diligence Directive requires firms to make sure they and their provide chains minimise human rights and environmental harms. Which means if firms don’t comply they are often fined. It implies that staff within the provide chains for firms doing enterprise in Europe, not simply European firms, can sue in Europe… That is about ESG and transnational torts, and essentially the most acute of these two is human rights affect.’
Litigation funding
Third-party funders are additionally reshaping the market, within the EU and past. ‘The litigation funding market has actually opened up in the previous few years,’ Richmond says. ‘It’s a improbable useful resource for claimants who must get collectively and want that help, however on the similar time, it’s an funding by these funders, and they should see a return, which is often a a number of of what they’ve invested, and it will increase when the case continues for longer.’
She notes that tribunals and courts are beginning to take a look at how settlements are distributed: whether or not the funder/class consultant is taking out greater than the category members; or the settlement is structured in a method that doesn’t encourage them to distribute the funds to class members; and finally if selections round settlement and the conduct of the case is perhaps influenced by its funding construction.
A latest CAT ruling required amendments to the proposed settlement in a case about prepare tickets to make sure that sufficient cash was distributed to class members. ‘It’s good that the courts are on it, as a result of we have to get the stability proper,’ Richmond explains. ‘It’s a superb factor that folks have entry to justice available in the market, and as long as it’s correctly regulated and supervised, there’s a superb case for funding.’
Extra lately, the Excessive Court docket threw out a category motion for flight delay compensation in opposition to British Airways and EasyJet due to doubts over the monetary motivation of the group consultant.
Richmond explains that it’s important that selections on class actions deal with motivation – both strategic or monetary: ‘For instance, a case can’t be structured in a method that it’s inconceivable to settle due to funders’ expectations, or as a result of the funder is launching a speculative declare as a result of it is aware of the defendant can be fearful about setting a precedent in the event that they misplaced.’
Optimistic outlook
Whereas the incoming Labour authorities has dominated out reversing Brexit or rejoining the Single Market or the Customs Union, which suggests the UK is unlikely to accede to Lugano, Hague 2019 and different EU laws is facilitating the power to implement judgments throughout jurisdictions.
Dr Totis Kotsonis, associate and head of state support and public procurement at Pinsent Masons, observes: ‘Proper after Brexit, the UK misplaced the Brussels regulation, so we relied on Hague 2005, which is clunky, and put us liable to individuals not wanting to decide on English regulation because the governing regulation of a contract, as a result of it could be troublesome to implement ought to a dispute come up. Hague 2019 is bringing us nearer to Lugano, so it is going to clear up a number of issues. It’s a step up from the present interim preparations and is as shut as we could be to the preparations we had as members of the EU. It assuages the issues expressed after we left the EU and may safe our function as jurisdiction of alternative for personal industrial disputes.’
Moreover, the continued development at school actions, facilitated by regulation and fuelled by a burgeoning litigation funding market, has changed cross-border instances which have moved overseas post-Brexit. This and the expansion of UK-style worldwide courts and dispute decision centres are offering further work for English legal professionals.
Joanna Goodman is a contract journalist
