31 January 2020 has arrived. The "Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community" has been given effect in the UK by the European Union (Withdrawal Agreement) Act 2020, and ratified by the European Parliament on 29 January 2020. The United Kingdom will leave the European Union.
Whilst some may expect to see an immediate step change, the reality of Brexit's short term impact on motor insurance and cross-border litigation will be limited at best. On 1 February 2020, the United Kingdom will be considered to be within a ‘transition period’, scheduled to last until 31 December 2020. Article 127 of the Withdrawal Agreement provides that EU law will apply to and in the UK during the transition period, unless otherwise provided in the Withdrawal Agreement, and any reference to EU Member States in EU law will be understood as including the UK. As such, from a legal perspective, not a great deal should change between now and 31 December 2020. The next 11 months carry a relatively clear position.
The corollary of the Withdrawal Agreement is that the Government has essentially bought itself further time until 31 December 2020 with which it will finalise the necessary reciprocal agreements with our former EU partners. At present, the transition period is set to run until 31 December 2020 but Article 132 allows that the transition period may be extended for “up to 1 or 2 years” by agreement before 1 July 2020.
Irrespective of the length, we do know that much will stay the same in the transition period in a variety of areas of interest to legal practitioners in the motor insurance sphere.
Article 67(1) of the Withdrawal Agreement confirms that the existing position will remain as is until the end of the withdrawal agreement with:
Recognition and enforcement of judgments
Article 67(2)(a) covers the recognition and enforcement of judgments. This provides that “(i)n the United Kingdom, as well as in the Member States in situations involving the United Kingdom”, Brussels I (Recast) will continue to apply to judgments “given in legal proceedings instituted before the end of the transition period”.
Presently, any proceedings issued before 31 December 2020 will have the effect of being able to be enforced in Europe upon their resolution.
The UK has also now received statements of support from Norway, Iceland, and Switzerland for the intended accession of the UK in its own right to the Lugano Convention 2007, which would take effect from the end of the transition period. The Lugano Convention will continue to apply during the transition period with the UK considered to be a member of the EU.
The position on applicable law to be applied in cross-border civil and commercial matters will remain as per the status quo, as the Withdrawal Agreement contains transitional provisions relating to civil cooperation which will continue to have effect between the UK and the EU after 31 December 2020. In relation to Applicable Law per Article 66, the current rules on applicable law in contractual and non-contractual matters under the Rome I and Rome II Regulations (Regulations 593/2008 and 864/2007) will apply to contracts concluded, or events giving rise to damage, before the end of the transition period. Given that Rome I and Rome II do not require reciprocity these will remain a part of British law in a post-Brexit environment. The UK has legislated to incorporate Rome I and Rome II into English law; under the Law Applicable to Contractual Obligations and Non-Contractual Obligations (Amendment etc.) (EU Exit) Regulations 2019 an English court will therefore apply the same rules as currently to determine applicable law.
EU Courts will continue to apply Rome I and Rome II, continuing to give effect to a choice of English law to the same extent as at present.
European Guarantee Funds and Uninsured Drivers
During the transition period, the UK will continue to be subject to the 4th Motor Insurance Directive, however, absent of any extension, the 4th Motor Insurance Directive will cease to apply after 31 December 2020. Similarly, on the issue of European Guarantee funds and uninsured drivers, the status quo will remain until 31 December 2020.
However, looking beyond that date, the MIB has already made significant efforts to persuade the Bureaux and Guarantee Funds of EEA states to sign bilateral Protection of Visitors agreements to facilitate the exchange of information when the UK is withdrawn from Directive arrangements which provide for the victims of accidents abroad to make compensation claims in their own country and language.
The MIB has made good progress and a number of reciprocal agreements have been signed. At the time of writing, the Guarantee Funds of France, Poland and Romania have yet to agree bilateral agreements to ensure the continuation of compensation, on a reciprocal basis, of visitors who become victims of accidents involving uninsured or untraced drivers.
If these countries do not sign, there may be no route to compensation for UK residents who are victims of accidents whilst visiting those countries after the transition period. The refusal of the France fund is problematic given its geographical proximity and a significant number of these types of claims. A continued refusal would potentially leave drivers from the UK in France in an unfavourable and unprotected position.
Friday 31 January 2020 will be a significant date in the history of the United Kingdom, yet the immediate impact will be one of ceremony rather than substance. The genuine impact of Brexit on civil litigation is unlikely to be felt in a significant way until the end of the transition period and beyond. The importance of the transition period cannot be overemphasised as the Government will seek to agree reciprocal arrangements with our former European Union partners. The threat of a no-deal at the end of the transition period remains very much live and should the prospect of no-deal arise again later this year, issues surrounding cross-border litigation will once again become an uncertain issue for citizens and lawyers alike.
Author: Craig Evans, Senior Associate.