No fierce consequences to be expected right away
Brexit implications for cross-border claims
The United Kingdom has applied to the EU to accede to the Lugano Convention. This Lugano Convention governs applicable law and jurisdiction between signatory states (Norway, Iceland, Switzerland, and the member states of the EU). However, at the time of writing, the EU has not agreed to the UK’s application. As such, we are left with uncertainty about the applicable laws and jurisdictions on cross-border claims in 2021.
After Brexit, Green Cards will be required by UK vehicles in the EU and EU vehicles in the UK. This is the default position, and therefore, should not depend on whether there is a deal or not. The Council of Bureaux, the managing organization of the Green Card, has recognized that Section 3 of the Internal Regulations could be applied to the UK. However, the general advice to insurers and motorists remains that they should have a Green Card for traveling to the UK. This advice also goes out to British drivers when they leave the country. With the upcoming possibility to print one’s own Green Card, the feared logistical issues for insurers are less of a concern.
Green Card keeps green light
In respect of Green Card claims, we foresee no changes. This is supported by the Council of Bureaux. The Green Card Agreement is not strictly EU legislation. Therefore, the UK will be allowed to remain part of the Agreement. Foreign insurers will still require representation in the UK and vice versa. As this will remain similar to our current situation, we urge insurers to maintain the status quo and not to change any claims processes yet.
Fourth Motor Directive
Contrary to the Green Card Agreement, Fourth Directive claims are part of EU legislation. Therefore, it is less clear how these claims will be handled. Claimants will still raise claims in the UK, and these claims may be essential in developing legislation. It could clear up how Fourth Directive claims should be handled in a no-deal situation, or when EU law is trans-positioned to UK law. At least in the short-term, there will be no change to how claims will be handled. For our clients, CED will keep monitoring Fourth Directive cases (or foreign accidents) that are handled in the UK. Case management strategies on a pragmatic approach will be produced as the situation develops. We recommend proceeding on a claim-to-claim basis after Brexit, to establish the best and most economical way for you. Only after some time, the legal position will become clear.
Deal or no deal
In the event of a ‘no deal-Brexit, the Recast Brussels Regulations are no longer applicable. These Regulations deal with enforcement and recognition of judgments between EU member-states. The Lugano Convention would act instead of the Recast Brussels Regulations. For the Lugano Convention to be effective at the start of 2021, it should have been signed before October 2020. However, as the EU has not signed this yet, jurisdictional challenges and confusion will arise. As for enforcement in a ‘no deal’-Brexit, the UK will lose the European Enforcement Order Regulation. This means that local rules and private international law in the country where the claimant is seeking enforcement will apply. If, by Brexit-day, a UK Court judgment has not been officially recognized by a representative of a foreign state, the automatic recognition, and enforcement rules do not apply. In a ‘deal’-Brexit, the Recast Brussels Regulations shall continue to apply to judgments given in legal proceedings instituted before the end of the transition period. In this case, no problems will arise for cases that are issued before the end of 2020.
Do all roads lead to Rome II?
The applicable law might be more straight-forward. In the event of a deal, the Rome II Regulation will remain applicable in the UK. The Rome II Regulation handles conflicts between national laws. In case of a deal, the Withdrawal Agreement confirms that these Regulations will apply during the transition period. CED strongly suspects we will have the same situation still, after December 2020. A UK Statutory Instrument has been made. The Law Applicable to Contractual Obligations and Non-Contractual Obligations (Amendment etc.) (EU Exit) Regulations 2019 confirms that the Rome II Regulation would become retained in law in the UK with some amendment. Therefore, the regulations about how conflicting national laws should be handled will remain part of UK law either way. We expect to see some significant test litigation in this area in the coming months. It is likely that new case law will be required to set precedent in the new legal landscape regardless of the type of Brexit we end up with.