How does BREXIT affect my debt in Europe?

The short and most truthful answer to this is…we don’t know!  Following the referendum to leave the EU, there is a great deal of uncertainty as to how particular laws will operate since a considerable amount of legislation governing the UK is tied to EU Law.

What we do know however, is that previously the European Commission proposed a Europe-wide expedited regime (“the Regime”) aimed at making the recovery of cross-border debts easier for both individuals and businesses. Prior to the Regime, chasing a debtor in another EU country was difficult and time consuming, not to mention expensive.

How does the Regime help me?

The Regime allows you to use an internationally-recognised court form to recover money you are owed by someone in another EU country, using the European Small Claims Procedure. This would mean that you would not need to follow the procedures existing under the laws of the other EU country to recover money owed to you. Furthermore, a judgment given pursuant to the European Small Claims Procedure is recognised and enforceable in any member state without the need for a separate declaration of enforceability.

Given the uncertainty that we now face post-Brexit, we at Gelbergs are advising all our clients to ensure that their paperwork is in order. This means including the all-important jurisdiction clause in your terms of business. If you need assistance with this, please get in touch with our litigation team.

Why is incorporating a jurisdiction clause so important?

Different countries have different laws, which can vary substantially from state to state. A jurisdiction clause is useful because it helps to avoid any potential uncertainty as to which laws will apply should a dispute arise, especially where the two contracting parties are located in different countries.

It is possible that the triggering of Article 50 may result in the UK ceasing to adopt the Regime and/or such EU measures (I know what you are thinking- 10 steps forward, two steps back!). Nevertheless we at Gelbergs believe that a court would find it difficult to depart from an express agreement between two parties about where a dispute is to be resolved, provided that a clear and concise clause has been drafted to that effect. This is why at these uncertain times, including a jurisdiction clause in your terms of business becomes even more important and relevant, and could save you considerable headache (and money!) further down the line. 

Priya Sejpal is the firm’s litigation expert and is happy to help with any queries that you may have. You can contact Priya on 0207 0570 0570 or email priya@gelbergs.co.uk.

 

Published 10 February 2017