How the impending Brexit impacts the legal framework of doing business with the UK – the German perspective: Litigation/civil proceedings

Civil proceedings in ordinary jurisdiction

The EU Regulation on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters would no longer be effective in the UK following a Brexit. Temporarily at least, this would complicate and delay the recognition and enforcement of German and British judgments in the respective other country. The recognition of foreign judgments is a prerequisite for their enforcement in the home country, meaning that the future ability to enforce German court judgments in the UK is questionable. One solution could be an international agreement between the EU or Germany and the UK. It is currently not possible to predict the time frame that would be required for negotiation and implementation of any such agreement.

Following a Brexit, service of statements of claim and written pleadings under the EU Regulation on the Service in the Member States of Judicial and Extrajudicial Documents in Civil or Commercial Matters would no longer be possible in German-British court proceedings, as the Regulation is applicable only to legal dealings between EU member states. Instead and as is the case with all other non-EU countries, the Hague Service Convention would apply, since both Germany and the UK are contracting states to this international agreement. This would probably delay service in civil matters since, in contrast to the EU Regulation on the Service in the Member States of Judicial and Extrajudicial Documents in Civil or Commercial Matters, the Hague Service Convention does not recognize any principle of expedition. As a result, waiting several months for a certificate of service from the recipient country is by all means possible. However, it is unlikely that the change of the law on service could be used for deliberate delaying tactics.

Following a Brexit, it would be questionable whether companies with an English legal form but based in Germany - e.g. Limited Company (Ltd.) or Limited Liability Partnership (LLP) - could in future be regarded as Civil Law Partnership (GbR) or Commercial Law Partnership (OHG) in Germany, with the result that their shareholders would be considered as partners and therefore unrestrictedly liable to the company’s creditors. However, such companies would remain capable of being parties to legal proceedings before German courts, even in the event of a forced/deemed change of legal form.

Civil proceedings before courts of arbitration

By contrast, a possible Brexit would have no effects on current and future arbitration proceedings. The recognition and enforcement of foreign arbitration judgments is based on the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, of which both Germany and the UK are contracting states. Accordingly, both countries are subject to internationally binding rulings that do not depend on (ongoing) UK membership of the EU.