No-Deal Brexit and claims against debtors in Great Britain

What, post-Brexit, might become of your debt claims against an enterprise or a person established in Great Britain? The closer the deadline of 29 March 2019 approaches, the more likely becomes the scenario of a “no-deal Brexit“. What then might be the situation for creditors in the (continental) European Union?

What is a ‘No-deal Brexit’?

In 2016 it seemed obvious that Great Britain and the European Union would set about analysing the consequences of Brexit and hammer out treaties, before 2019, to fill in the legal gaps created by the choices of our neighbours. Today, 5 months before the due date, confusion reigns supreme, mainly because the British are divided on the issue that they themselves created. Brexit may yet go ahead without any form of arrangement (“no-deal”), not least as regards legal matters.

However, one reasonable – albeit uncertain – hypothesis is that there will be a prolongation of the effect of treaties in force before 29 March 2019 until such time as the terms of a “hard” or a “soft” Brexit are finally determined. Many hope to see their wishes ultimately fulfilled, without however any unrealistic expectations.

So, what about your debt claims the other side of the Channel?

An undertaking, by a private individual or by a company, whatever the registered place of business, remains valid in all cases. Any such undertaking must of course be amenable to proof beyond doubt. A contract (or order form, etc.) is key. But, once it becomes necessary to enforce its execution, it also becomes necessary to know which jurisdiction and which laws are applicable. Put simply, are you going to approach a Belgian court or a British court? The current procedures, as in force before 29 March 2019, are explained in our article “The Brexit and Receivables in the UK”, 27 Dec 2016.

Choice of applicable law and competent court

If no relevant agreement is in place by 29 March 2019, it will no doubt be simpler to insert in the contract a clause stating that (for a client established in Great Britain), the law of the client’s country (England, Scotland, Wales or Northern Ireland) shall apply and that any disputes are to be referred for settlement to a court in the country of that client. The British courts are generally regarded as reliable, so this should allow the creditor to avoid any procedural technical argument and eventually coming up against a legal void.

It is also advisable to draw up the contract (order form, general conditions, etc.) in English for these clients. This would avoid the costs for sworn translation (translation accepted by the courts of law but involving additional costs and waiting times).

… and what if the applicable law and the competent court are not defined?

If your contract has nothing to say on these matters, international private law applies. A frequently encountered case, in brief, is that the applicable law is that of the place where the contract is signed (which is not always easy to establish) and that the competent court is the court, competent for the case in question, close to the place of business of the defendant (that is, in our case, the person or the company summoned by the creditor).

It will be understood, for example, that the applicable law might happen to be Belgian whereas the court might happen to be English, which would throw up complications, ergo more additional costs and waiting times. On the other hand, the English court may equally well declare itself incompetent while the debtor objects to being required to appear before a Belgian court. There would, in this case, not be any solution in law, no doubt resulting in loss of the claim for the creditor.

Conclusion

A “no-deal Brexit” is an unpleasant but, unfortunately, increasingly likely scenario. It might therefore help matters somewhat to make provision for applicable law and competence in your contracts as of now, and to draw them up in English. For the sake of your clients operating out of Great Britain.

This may not provide a solution for every particular case, for instance that of the client moving to Great Britain after establishment of the contract. However, it is the best that can be done if you think that the risk of a “no-deal Brexit” is real.

Any questions, debts to recover: contact us!

No-Deal Brexit and claims against debtors in Great Britain

What, post-Brexit, might become of your debt claims against an enterprise or a person established in Great Britain? The closer the deadline of 29 March 2019 approaches, the more likely becomes the scenario of a “no-deal Brexit“. What then might be the situation for creditors in the (continental) European Union?

What is a ‘No-deal Brexit’?

In 2016 it seemed obvious that Great Britain and the European Union would set about analysing the consequences of Brexit and hammer out treaties, before 2019, to fill in the legal gaps created by the choices of our neighbours. Today, 5 months before the due date, confusion reigns supreme, mainly because the British are divided on the issue that they themselves created. Brexit may yet go ahead without any form of arrangement (“no-deal”), not least as regards legal matters.

However, one reasonable – albeit uncertain – hypothesis is that there will be a prolongation of the effect of treaties in force before 29 March 2019 until such time as the terms of a “hard” or a “soft” Brexit are finally determined. Many hope to see their wishes ultimately fulfilled, without however any unrealistic expectations.

So, what about your debt claims the other side of the Channel?

An undertaking, by a private individual or by a company, whatever the registered place of business, remains valid in all cases. Any such undertaking must of course be amenable to proof beyond doubt. A contract (or order form, etc.) is key. But, once it becomes necessary to enforce its execution, it also becomes necessary to know which jurisdiction and which laws are applicable. Put simply, are you going to approach a Belgian court or a British court? The current procedures, as in force before 29 March 2019, are explained in our article “The Brexit and Receivables in the UK”, 27 Dec 2016.

Choice of applicable law and competent court

If no relevant agreement is in place by 29 March 2019, it will no doubt be simpler to insert in the contract a clause stating that (for a client established in Great Britain), the law of the client’s country (England, Scotland, Wales or Northern Ireland) shall apply and that any disputes are to be referred for settlement to a court in the country of that client. The British courts are generally regarded as reliable, so this should allow the creditor to avoid any procedural technical argument and eventually coming up against a legal void.

It is also advisable to draw up the contract (order form, general conditions, etc.) in English for these clients. This would avoid the costs for sworn translation (translation accepted by the courts of law but involving additional costs and waiting times).

… and what if the applicable law and the competent court are not defined?

If your contract has nothing to say on these matters, international private law applies. A frequently encountered case, in brief, is that the applicable law is that of the place where the contract is signed (which is not always easy to establish) and that the competent court is the court, competent for the case in question, close to the place of business of the defendant (that is, in our case, the person or the company summoned by the creditor).

It will be understood, for example, that the applicable law might happen to be Belgian whereas the court might happen to be English, which would throw up complications, ergo more additional costs and waiting times. On the other hand, the English court may equally well declare itself incompetent while the debtor objects to being required to appear before a Belgian court. There would, in this case, not be any solution in law, no doubt resulting in loss of the claim for the creditor.

Conclusion

A “no-deal Brexit” is an unpleasant but, unfortunately, increasingly likely scenario. It might therefore help matters somewhat to make provision for applicable law and competence in your contracts as of now, and to draw them up in English. For the sake of your clients operating out of Great Britain.

This may not provide a solution for every particular case, for instance that of the client moving to Great Britain after establishment of the contract. However, it is the best that can be done if you think that the risk of a “no-deal Brexit” is real.

Any questions, debts to recover: contact us!