1.3.2021

Applying English Law and Enforcing Judgments In A Post-Brexit World

The departure of the UK from the European Union and the end of the transitional period at the turn of 2020 and 2021 mean that the EU’s harmonised regulations on conflict of laws and the recognition and enforcement of judgments are no longer applicable between EU member states and the UK.

In this blog post, we look at which legal instruments could replace the Rome I Regulation, which provides for conflict of laws, and the Brussels I Regulation, which provides for the recognition and enforcement of judgments, in the new relationship between the UK and the EU member states. We also provide some tips to keep in mind when agreeing on governing law and dispute resolution clauses post-Brexit. 

No Significant Brexit Impacts on Conflict of Laws – Yet

The Rome I Regulation determines the law applicable to contracts in EU member states. The courts in member states are obligated to comply with the conflict of laws rules of the regulation, which means that the applicable law is determined the same way regardless of which member state the matter is being decided in. The Rome I Regulation assumes that the parties to a commercial contract can freely agree on what law they want to apply to their contract.

The conflict of laws rules of the Rome I Regulation do not limit the applicable laws to just those of EU member states.  For example, Finnish courts continue to apply the same conflict of laws rules despite Brexit, and these rules could also lead to the application of English law. Thus, Brexit has not brought any significant changes to conflict of laws yet.

However, the end of the UK’s membership in the EU does mean that the Rome I Regulation’s conflict of laws rules are no longer directly applicable in the UK. At the moment, the content of the UK’s national conflict of laws rules is identical to those of the Rome I Regulation. These rules could lead to, for example, Finnish law being applied in UK courts under the same grounds as before. However, the UK no longer has any obstacles to changing its national conflict of laws rules in the future.

Major Changes to Recognition and Enforcement of Judgments

In contrast, Brexit has brough major changes to the recognition and enforcement of judgments issued in the UK in EU member states. Companies should take this into account when negotiating dispute resolution clauses with UK companies.

The recognition of foreign judgments requires a separate legal basis in Finland. Judgments issued in UK courts while it was still a member of the EU were subject to the Brussels I Regulation, which meant that they were extensively enforceable in Finland without separate court proceedings (exequatur). However, the trade and cooperation agreement between the EU and the UK, which entered into force on 1 January 2021, contains no provisions corresponding to or replacing Brussels I with respect to the recognition and enforcement of judgments.

UK Planning to Replace Brussels I with Lugano Convention

The UK is planning to fill the gap left by the Brussels I Regulation by acceding to the Lugano Convention on jurisdiction and the enforcement of judgments in civil and commercial matters. The Lugano Convention has been signed by the member states of the EU and EFTA, and it is substantially similar to the Brussels I Regulation.

The UK has applied for accession to the Lugano Convention. Acceding to the convention requires the approval of all of the other signatories, and the EU’s approval is currently uncertain.

If the UK’s accession to the Lugano Convention is approved, the enforcement of a judgment based on it in Finland will require exequatur, i.e. an enforcement order issued by a district court.

Post-Brexit Enforcement also Possible under Narrower Hague Convention

In 2020, the UK acceded to the Hague Convention on Choice of Court Agreements, which is narrower in scope and substance. The Hague Convention is an instrument of the Hague Conference on Private International Law and is currently in force in the EU member states, the UK, Mexico, Singapore and Montenegro.

Based on the Hague Convention, Finland will recognise and enforce judgments issued in the UK in which the jurisdiction of the court is based on an exclusive, written choice of court agreement. The enforcement of a judgment in Finland based on the Hague Convention requires an enforcement order from a district court.

After Brexit, companies need to consider carefully whether to select a UK court as the competent court and only do so after ensuring that any judgment issued by such court will be enforceable and recognisable.

Tips on Negotiating the Governing Law and Competent Court Post-Brexit

Courts in both the EU and the UK continue to respect agreements on the governing law applicable to contractual obligations as they did before Brexit. The choice of law rules that apply in the absence of an agreement also still lead to the application of the law of the same jurisdiction as before Brexit. However, it is important to keep an eye out for any changes that may be made to national legislation in the UK.

The clearest solution with respect to the recognition and enforcement of a judgment is to agree to resolve disputes in arbitration. Finnish courts continue recognise and enforce arbitral awards issued in the UK under the same conditions as before Brexit.

When dealing with British companies after Brexit, it is important to expressly agree on the competent court. If a UK court is selected to settle disputes, we recommend ensuring that the wording of the choice of court agreement fulfils the requirements of the Hague Convention and falls within its scope.

Latest references

We successfully represented a Finnish manufacturing company in arbitration proceedings under the SCC rules against a global construction company. The dispute was governed by Finnish law and the seat of arbitration was Stockholm, Sweden. The dispute mainly concerned the termination of an erection contract and the right to compensation for delays of the project and for cost increases due to Russia’s invasion of Ukraine. The main questions in dispute were the lawfulness of the termination of the erection contract as well as the consequences of the termination such as the right to costs to complete the project after termination, the right to liquidated damages for delay of the project and adjustment of contract price due to cost increases. The total value of the dispute exceeded EUR 15 million.
Case published 8.1.2025
We represented a mutual real estate company belonging to a large Finnish group in arbitration proceedings against a construction company. The arbitral tribunal rejected the construction company’s claims in their entirety and ordered the construction company to reimburse our client for the costs of the arbitration proceedings in full. The dispute concerned the contract price under the construction contract, which was agreed to be determined on the basis of our client’s yield requirement and the rent under the lease agreement for the building in question. The parties disagreed on the indexation clause applicable to the rent adjustment and its impact on the contract price.
Case published 22.11.2024
We successfully represented a major Finnish construction company in a dispute and settlement negotiations concerning a large construction project. The dispute mainly concerned liabilities for additional and change works as well as project delays, and the value of the claims of the parties was approximately EUR 50 million.  If the case had not been settled, it would have been one of the largest construction disputes ever tried in the Finnish courts. The projected number of hearing days was unprecedentedly more than 300 days. To find an amicable solution to the extensive dispute, the parties engaged in settlement negotiations and court mediation. Eventually, the parties reached an amicable settlement to the full satisfaction of our client and thus the parties avoided the costs and risks of an extensive trial.
Case published 7.2.2024
We successfully acted for Meyer Turku Oy and Meyer Werft GmbH & Co. KG in an extensive criminal case, from the very beginning of the internal investigation to the court’s decision. The case centred around a person having made unauthorised copies of thousands of files containing Meyer-proprietary information and providing consulting services to a competing Chinese shipyard. The District Court handed down its judgement in October 2023, holding that the offender’s actions constituted criminal copyright and trade secret infringement as well as industrial espionage. The court furthermore held that the offender’s actions could be attributed to a limited liability company he had set up. The court ordered the company to pay Meyer EUR 5 million in compensation for the infringement and also awarded Meyer damages for its expenses. The court thus accepted Meyer’s claims in full. The matter is an exceptionally extensive and significant case on criminal trade secret and copyright infringement. Meyer Turku and Meyer Werft are among the largest and most modern shipyards in the world. Luxury cruise ships built by Meyer are internationally known for their cutting-edge technology and innovativeness. Outset In 2018, Meyer received indications that certain Meyer-proprietary files might have been copied from its systems unlawfully. An extensive internal investigation revealed that that a person had copied a significant number of files containing information protected under both copyright and trade secret laws. The offender had also set up a limited liability company and, in the summer of 2018, entered into a service agreement with a Chinese shipyard. Under the agreement, the offender was to provide consulting services relating to new innovation and technology to the Chinese shipyard. The offender and his company also received significant payments from the Chinese shipyard. After the internal investigation, a police report was filed in the late summer of 2018. In addition, the offender’s property was confiscated for security. Criminal charges were filed, and Meyer presented its claims for compensation and damages as a complainant. Results The District Court agreed with Meyer and the prosecution that the offender’s actions met all the elements of criminal copyright and trade secret infringement as well as of industrial espionage. The court held that the offender’s actions constituted infringement of Meyer’s copyrights and its neighbouring database and catalogue rights under the Finnish Copyright Act and that all the elements of criminal trade secret infringement and industrial espionage, as defined in Finnish law, were met. The court also held that the offender’s actions could be attributed to the limited liability company he had set up. The court ordered the company to pay Meyer EUR 5 million in compensation for the copyright and trade secret infringements. The court also awarded Meyer damages and legal costs as claimed. The court thus accepted Meyer’s claims in full. This decision is noteworthy for the protection of the European shipbuilding industry’s know-how in general. The judgement is final.
Case published 18.10.2023