The UK is scheduled to leave the European Union (EU) (“Brexit”) on January 31st, 2020. This will have wide-ranging implications for businesses in the UK—or those trading with the UK—as well as for legal advisors. The framework of EU law will continue to apply in the UK until Brexit occurs, and the conditions that apply afterwards will depend on the nature of arrangements agreed between the EU and the UK. A ‘transition period’—one aspect of any Brexit deal—will mean most provisions of EU law will continue to apply for a further period.
CIArb has answered the most pressing questions relating to Brexit and alternative dispute resolution (ADR) below.
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CIArb is a politically neutral organisation, and therefore remains neutral on Brexit. Our diverse membership covers a wide spectrum of opinions on the UK’s exit from the EU, and it is not the role of CIArb to take a party-political position. The CIArb policy team works with politicians of all viewpoints, providing expert and unbiased advice.
Brexit will fundamentally alter many of the conditions of doing business between the EU and the UK, from the paperwork required for exports to the enforceability of judgements arising from cross-border disputes.
The scenario differs depending on whether there is a no-deal Brexit or Brexit with a deal, and whether the deal is the Withdrawal Agreement put before Parliament in October 2019, or an amended version. In the case of a no-deal Brexit, the Institute of Directors (IOD) has said “there is unlikely to be any transition or adjustment period where the status quo continues (such a period is legally provided for in the current agreement)”.
Businesses who do not use ADR clauses in their contracts are relying on the continuing enforcement of awards arising from court judgements after Brexit—however the framework covering cross-border enforcement of court awards is primarily EU legislation. The UK Government has warned that “in the event of ‘no deal’, there would be no agreed EU framework for ongoing civil judicial cooperation between the UK and EU countries…Where appropriate you may wish to seek professional legal advice on the implications of these changes for your individual circumstances.”
Poor contract drafting is already an all-too-common issue for businesses, with potentially costly consequences down the line. When issues occur, mistakes made during drafting—for example, by the exclusion of valid dispute clauses—can result in lengthy disputes, or even a lack of protection. Brexit may in many cases exacerbate these issues by adding to legal complexity and may leave businesses that rely on cross-border litigation as a default in a vulnerable position. ADR clauses in contracts can resolve some of these issues.
The UK Government’s official advice should be consulted, as well as the sector-specific advice provided by the IoD and the CBI. The UK Government also advises parties to seek legal advice from their lawyer where relevant. ADR mechanisms can be utilised to help protect businesses facing uncertainty, and CIArb offers expert guidance across all aspects of dispute avoidance, management and resolution.
As a first port of call, businesses should seek to avoid disputes by putting in place conflict avoidance strategies, embedding these best practices within their organisations to see off potential issues at an early stage. While conflict avoidance is important irrespective of Brexit, the increasingly complex environment during and after the UK’s exit will make it more important than ever. Different ADR mechanisms should be used as part of a tiered approach, for example through improved negotiation techniques and/or Conflict Avoidance Boards (CABs), as well as Early Neural Evaluation (ENE) and/or mediation if disputes do arise. For further information on the range of different ADR mechanisms, please consult CIArb’s Dispute Appointment Service (DAS).
Businesses which do not already do so should consider using clauses in their contracts that require parties to arbitrate in the event of a dispute (‘arbitration clauses’). Arbitral awards are enforceable in almost all countries worldwide under a UN convention (“the New York Convention”), which is unaffected by Brexit, unlike the legal regime covering litigation. Please consult your legal adviser for advice on using arbitration, or to discuss how ADR clauses can be inserted into pre-existing contracts.
CIArb recommended clauses are a free, publicly-available resource that can be used within contracts, with arbitration and tiered mediation-arbitration clauses provided for. For further information on CIArb arbitration schemes and recommended clauses, please contact firstname.lastname@example.org
In short, no. Arbitration proceedings within the jurisdiction of England & Wales and Northern Ireland will continue to be regulated by The Arbitration Act 1996, and the Arbitration (Scotland) Act 2010 for Scotland will likewise be unaffected. The enforcement of international arbitral awards will continue to be governed by The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“the New York Convention”), which is a United Nations Convention—not a product of EU legislation—and therefore unaffected by Brexit.
161 states are parties to the New York Convention, including the UK and all members of the EU. Brexit will therefore have little effect on how businesses enforce arbitral awards internationally after Brexit. A number of law firms have referenced the even greater attractiveness of arbitration as a means to counteract Brexit uncertainty (e.g. Norton Rose Fulbright, HFW, Mishcon de Reya, Pinsent Masons, Eversheds Sutherland, Herbert Smith Freehills, Clifford Chance, Freshfields, Allen & Overy, Slaughter and May, Ashurst, BDM Law, Mills &Reeves, Brodies LLP, Bird & Bird).
Practitioners and users report that they very rarely resort to mechanisms for the enforcement of settlement agreements resulting from mediation. Laws regarding mediation in the UK will be affected by Brexit, however the government has pre-emptively sought to address the issues that may arise.
Directive 2008/52/EC (“The EU Mediation Directive”) came into force in 2008, applying to cross-border civil and commercial disputes involving parties from EU member states. England and Wales enacted legislation (Cross-Border Mediation (EU Directive) Regulations 2011) to ensure compliance with a number of points in the Directive (enforceability, confidentiality and limitation), with issues around quality and court intervention already covered by existing legislation. As it currently stands Brexit will affect laws around confidentiality, limitation periods and enforceability, as the UK government brought forward a statutory instrument repealing the 2011 regulations that implemented the EU Mediation Directive (The Cross-Border Mediation (EU Directive) EU Exit Regulation 2019). This statutory instrument will come into effect in the case of a no-deal exit.
Post-Brexit, it is likely the draft Withdrawal Agreement will apply from the end of the transition period (presuming Britain doesn’t leave on “no-deal” terms). Article 69 sets out the circumstances in which EU law will apply in the case of ongoing procedures (with mediation covered within this). The exact nature of the long-term EU—UK relationship on mediation will be agreed at a later date.
The UN Convention on International Settlement Agreements Resulting from Mediation (“Singapore Convention on Mediation”) has not entered force, and furthermore neither the UK nor any of the EU member states are signatories. Brexit therefore will have no effect in this area.
CIArb is an international organisation that promotes ADR across the globe and does not favour any particular jurisdiction, giving independent advice to states across the world. As part of its anniversary celebrations in 2015, CIArb created the CIArb Centenary Principles to outline the factors that make an attractive and safe arbitral seat. Brexit will not make English or Scottish Law any less attractive internationally, and in some models of a future UK relationship with the EU, some parties may even view the UK more favourably as an alternative to EU Law. The UK will continue to be a strong financial services and legal centre, ensuring it remains a contender on the world stage to attract international disputes business. The UK’s courts and tribunals—as well as its domestic arbitration legislation—enjoy a global reputation, and the UK is home to a wide range of specialised arbitration talent.
However, the UK should not be complacent regarding its position as the world’s pre-eminent disputes hub. This issue was addressed as part of an All Party Parliamentary Group (APPG) for ADR session in mid-2019, the details and minutes of which can be accessed here. In August 2019 CIArb accompanied two APPG members on a fact-finding visit to Singapore to understand how the two countries can strengthen their disputes sectors, and a report of recommendations from the trip will be published early in 2020. CIArb also serves as Secretariat to the group LegalUK, organisers of 2019’s inaugural London International Disputes Week. Scotland will also be put in the spotlight shortly, as it will be hosting the ICCA Congress in 2020.
No – CIArb is a global body and our system of recognised course providers (RCPs), membership grades and postnominals will be entirely unaffected, regardless of the Brexit process (for more information please speak to Education & Training). Likewise, CIArb qualifications will continue to operate in the UK and worldwide no matter what form Brexit takes.
CIArb offers a range of different courses on ADR, covering techniques such as arbitration, adjudication and mediation. CIArb’s Education &Training team are happy to help and can assist you with selecting the appropriate training. CIArb offers Pathway courses for those aiming to reach various grades of membership of the Institute, as well as non-membership courses for those seeking to develop or deepen specific skills, such as negotiation. Bespoke training programmes can also be developed and delivered in-house to upskill entire departments. To access the course catalogue and for further information, please see Education & Training.
For policy-related issues, please contact Lewis Johnston (CIArb Head of Policy, Public Affairs and Research) at email@example.com.
If you would like further information on using CIArb dispute clauses or utilising CIArb’s arbitration schemes, please contact DAS at firstname.lastname@example.org.
For advice on drafting contracts or for queries about your particular business situation, please seek legal advice and see government or EU guidance as appropriate.