Brexit: the crossroads

Fri 30 October 2020, Philippe Ropenga

My previous post deals with a possible failure of Brexit.¹ This outcome can still be avoided but is likely, not because the end of the transition period approaches but because the British government does not seem ready to reach an agreement with the EU. The UK is now at a crossroads: there are several legal ways to reach an agreement, and the UK has to be united to negotiate a final agreement. I guess that some readers have not been educated in law. I therefore will start with a basic notion and will end this post on a technical comment on the Lugano convention that will be of interest to the layman and to the practitioner. Comments regarding the Lugano option are warmly welcomed since it is the main topic at the moment regarding Brexit.

Lawyers examine the facts of a given matter to decide what the legal issue is and how to solve it. When several countries are involved in a matter, several courts are involved and each court may decide to apply a different legal rule. This may lead to very different solutions. Private international law is not used to decide the solution to a given matter but to decide what judge has to decide it and what law has to be applied. It is important to note that a judge that has jurisdiction over a given case does not necessarily have to decide it by applying only domestic law. English law may point to a solution that finally relies on French law for example. An English court may find that it has jurisdiction and that the matter that is has to decide is closely connected to French law whereas the connection to English law is loose. Deciding what court has to decide the matter is different from deciding what law has to be applied: these two issues are independent from one another. The first question is that of conflict of jurisdictions while the second is that of conflict of laws. Private international law is used to answer the two questions.

Let us assume that you are a pragmatic Head of State. You do not want courts, businesses, and citizens to be confused when dealing with international matters. Hence, you wish to negotiate a sensible and easy-to-use international agreement to avoid uncertainty. You are a wise leader!

The second question that you have to solve is: how do I proceed to do this? There are two main ways to do it.

• Bilateral agreements. You negotiate a separate agreement with each country. Let us say that you wish to establish a commercial partnership with 30 countries. You need to negotiate, draft, sign 30 agreements and manage relationships and disputes according to the 30 different sets of rules that have been laid down in the agreements. There is a major advantage to bilateral agreements: no one can force you to apply rules that you have not agreed to. Bilateral agreements have however a major disadvantage: there are complex to manage on a large international scale. If someone travels or sells goods aboard, how is one supposed to determine what rule to apply to a given matter? The same issues arise with large corporations that sell frequently aboard but they may have in-house counsels who can supervise legal matters daily and also influence public leaders to change the law in a way that suits them better.
• Multilateral agreements. You join an organisation and each member has to apply rules that have been collectively decided. It is easier for you to promote the adoption of rules that suit you if you are an influent member within the organisation. The major disadvantage of multilateral agreements is that you may have to apply rules that do not suit you. There are many different types of multilateral organisations that are more or less integrated in the sense that they rely on a more or less harmonised legislation. The EU favours deeper integration while the UN for example relies on loose integration.

Let us assume that, as Head of State, you prefer the multilateral option. You can see without my help that you need to answer a third question: what level of integration do I want to achieve? There is no easy answer to this question. A deeper integration makes the multilateral agreement more efficient by minimising the uncertainty caused by a member acting differently. You have also to bear in mind that interpretation is crucial in law. It is one thing to agree to apply a common set of rules; it is another to decide to apply these rules in the same manner. The Court of Justice of the EU makes the EU attractive because it makes sure that EU law is applied similarly in the whole EU. This is a sign of deep integration. Is it possible to conceive a slightly looser integration? Yes, the Lugano Convention 2007² is similar to the EU Regulation 44/2001 known as Brussels I³ that deals with civil and commercial matters. The EUCJ does not have to decide cases that involve the application of the Convention. The UK may join the Lugano Convention and would therefore rely on rules that are being used now without being bound by EUCJ case law. Nevertheless, Protocol nº 2 of the said Convention deals with its uniform interpretation of the Convention.⁴ Why is uniform interpretation necessary? If you wish to rely on a multilateral agreement to apply similar rules, one should also pay attention to its interpretation since you certainly do not wish any Member State to get round uniform rules by applying these rules in a very original way. This would undermine legal certainty and put citizens and businesses at risk. Strange as it may seem, private international law and family businesses have something in common: they require mutual understanding. You cannot force two heirs to agree to run a family business. They need to feel that they are linked by values and not only by law or blood. Do you accept a new partner if you feel that he does not know what he wants and does not care about other partners? If your answer to this question is negative, you may understand why the perspective of the UK joining the Lugano Convention does not really reassure me. I know that this outcome is promoted by the Law Society for England and Wales⁵ and welcomed by Switzerland⁶. With all due respect to these entities, I cannot see how signing an agreement can help the British achieve better mutual understanding with countries within the EU and among themselves. Does the UK really know what it wants? If not, Brexit will successfully fail before the end of this year. Don't panic! The UK can still ask for an extension of the transition period to have time to reflect about a clear exit from the EU.

Who will be will see.

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