Brexit and the 'no deal' scenario - the impact on cross-border claims

Posted: 24/10/2018

In advance of Brexit talks, the UK Government published a white paper containing its 'twelve guiding principles' for the negotiations. These included reference to the following two criteria, which were particularly relevant to cross-border EU claims:

• providing certainty and clarity; and
• securing rights for EU nationals in the UK and UK nationals in the EU.

As the chances of a deal become increasingly precarious, the prospect of certainty and clarity seems ever more remote.

If the UK and the EU can secure a deal, the European Communities Act 1972 will be repealed on the exit date. Little would change overnight, with domestic laws implementing EU directives and directly applicable EU laws gradually enshrined into UK law. The withdrawal agreement would also include an enforcement mechanism, to be enacted into UK domestic law.

Whilst this would inevitably cause some challenges, the potential fall-out from a 'no deal' is far more alarming. The existing regime and rules relating to cross-border claims would no longer apply, creating major obstacles to injured victims (and their lawyers) in seeking justice following cross-border accidents.

In this scenario, the headline concerns for the injured UK holidaymaker would centre on changes to jurisdiction, enforcement and costs.

UK residents would no longer be able to anchor a claim in the UK for a motor accident in Europe (as is currently permitted by the Brussels I (Recast) Regulation). It would only be possible to pursue the claim in the European member state where the accident occurred.

This would not necessarily have a significant impact on the damages awarded to a claimant – because the starting point with the 'Rome II' legislation is that foreign law applies to liability and quantum, even if a claim is pursued in England. However, in a catastrophic injury claim, a claimant may only be able to rely on one medico legal report from the foreign court appointed expert, compared with the UK practice of obtaining reports from experts in a range of disciplines. Pursuing the claim abroad would also protract the litigation significantly and create much more uncertainty for an English claimant.

A no deal scenario would impact the level of costs a claimant can expect to recover from the EU insurer. It is rarely possible to recover an English lawyer’s costs for litigation in an EU member state, even if a claim is successful. The local lawyer’s fees are also often not recoverable, or at least only recoverable in part. This will therefore reduce the overall level of damages payable to a claimant and also the number of claims that UK lawyers are able to take on.

If laws are not introduced to allow mutual enforcement, this will have a major impact on existing claims pursued in the UK and cross-border claims in the future. Some EU insurers are already inviting UK claimants to enforce UK judgments in the country where the accident occurred and this trend is likely to increase if there is no enforcement mechanism in place. Inevitably many EU insurers will adopt a holding position, regarding ongoing litigation, pending the outcome of the negotiations.

In recognition of these challenges, the Pan European Organisation of Personal Injury Lawyers (PEOPIL) recently met with the British Ministry of Justice (including the chief Brexit negotiator for the Ministry of Justice) and the Department of Transport. There was overall consensus on the importance of seeking to maintain the existing regime and there will be intensive lobbying from the interested parties in the weeks ahead.

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