Brexit: the return of the Italian Torpedo

The letter to be delivered on Wednesday to the European Commission will have the most profound consequences for this country: your own view as to whether this will be for good or ill will probably reflect your position as a Remoaner or a Brexiteer. What is however certain is that whether the UK’s Article 50 letter is brief and to the point or rather longer as a positioning paper, the devil will rest in the detail of the subsequent negotiations of how Britain and Europe untangle 43 years of EU Law and jurisprudence. The knottiness of the problem is illustrated by a report (in fact merely the 17th report of the session) published by the House of Lords EU Committee which considers some of the access to justice issues that are entangled with Brexit.

The report notes that 3 regulations (Brussels I (recast), Brussels IIa and Maintenance Regulations) play a significant role for British citizens, families and businesses who live, work, travel and do business in the EU. The Regulations are considered to work well, have been shaped substantially by UK law and lawyers and cover areas such as divorce, motor claims, clinical negligence, breach of contract, motor accidents abroad and employment disputes. The regulations provide for automatic recognition and enforcement of judicial decisions throughout the EU. The evidence before the House of Lords was of a system that was working well providing certainty, predictability and clarity about where a legal dispute should be determined and how judgment enforced.

Enquiry by the House of Lords of eminent academic and practising legal experts highlighted the challenges that the Government will face because these regulations rely on reciprocal action by other states. The Great Reform Bill could enable recognition of EU judgments for enforcement but the GRB cannot compel foreign courts to recognise UK law.

So what? These regulations impact not just upon international contractual disputes but on the more personal issues of divorce, custody, medical malpractice, employment issues and litigation arising from car accidents abroad – issues that affect people not corporations. Offering certainty, as the regulations do, as to which is the appropriate court that is seized of a matter will avoid the costly applications to stay one set of two issued proceedings. (The report notes that the regulations solved the problem of the Italian Torpedo: the deliberate “spoiling” tactic of a party quickly issuing proceedings in the slow Italian Courts which then required other, perhaps more appropriate or efficient courts to stay any proceedings subsequently issued by the other party.)

The application of the regulations and the automatic recognition of judgments presently avoids the costs of application for registration and enforcement of judgments. Absent the regulations, complexity is added to the process increasing cost as lawyers have to get involved and thereby restricting access to justice for the individual.

The issues for insurers reflects those of individuals. Unless an equally effective regime of cross border justice between the UK and EU2019, there will be additional costs associated with determining issues that arise from motor accidents, medical negligence, contractual or enforcement actions with an European component. Premiums will need to rise to cover the cost and uncertainty or, alternatively coverage may not be available, for the circumstances where such disputes might arise.

Is this a realistic threat? It is certainly a risk and the experts of the UK’s revising Chamber, the House of Lords, politely express considerable doubts as to whether the scope of the problem is understood. In its elegant summary it states “the Committee was unable to discern a clear Government plan as to how the continued post-Brexit operation of these important Regulations will be secured” going on to conclude “that either the Government has decided not to make its position public or, as yet, has not taken full account of the impact of Brexit on the areas of EU law that these Regulations cover.”

It appears that the House of Lords is concerned that the Government may not be aware of the slowly approaching Italian Torpedo.

I was pleased to first publish this blog on the BLM webpages on 27/03/2017.