The explosive Brexit spit that no one is talking about could slam the British economy

The agreement in question is called the Lugano Convention and essentially defines the jurisdiction of national courts, which guarantees the legal recognition and enforcement of a wide range of civil and commercial judgments in cross-border disputes.

London is widely regarded as the global capital of international dispute resolution thanks to England’s world-class legal system and courts. It is a broad and very lucrative industry that deals with everything from family disputes to international business operations. And a prolonged lack of adherence to the Lugano Convention could pose a serious threat to Britain’s world-wide legal services sector and create difficulties for both large companies and ordinary people.

The United Kingdom dropped out of the treaty as a consequence of Brexit and requested to join again in April 2020. Nevertheless, while the non-EU signatory states (Iceland, Norway and Switzerland) accepted its resumption, the European Commission has so far recommended the EU reject this request, saying the block was “not in a position” to give its consent to the accession of Great Britain.

Scott Devine, from The City UK, a body representing UK-based financial and professional services, says the legal services sector employs over 350,000 people, with two-thirds of those jobs outside London.

These positions are not all in major commercial law firms. The sector, Devine says, “is everything from a large multinational law firm” working on international contracts and mergers to “the high street lawyer’s only operator dealing with family issues”, such as wills and real estate.

Devine says the reputation of English law has made it “the preferred law of business and international contracts.” According to Devine, 77% of claims in commercial court in 2019 had a party outside England and Wales, while 43% were entirely externally based.

Some of Brexit’s most ardent critics are concerned that the lack of joining Lugano and the poor relations between the United Kingdom and European countries after Brexit could diminish this important sector.

Dominic Grieve, the former Attorney General for England and Wales, says his concern is the long-term “viability of London as a center for conflict resolution.”

He goes on to say that the longer it goes on, “the more potentially harmful it can become, for there is no doubt that Britain, when it was in the EU, was considered the place of optional dispute resolution for EU trials by every conceivable art. “

One problem London is now facing is that outside the convention and no clear sign of a decision, EU nations will soon be able to compete directly with UK business capital.

“The alternatives are slowly becoming clear to international companies that want to operate in the EU and do not want any blockages,” said Josep Galvez, a former Spanish judge who was admitted to the English lawyer at Del Canto Chambers in London and Galvez Pascual in Spain. .

“This Lugano limbo that the United Kingdom is in is the worst possible situation, as lawyers on both sides have no idea what will happen in the long run. I think the EU wants to get it. United Kingdom to suffer and allow EU jurisdictions to take business From England. ”

Galvez believes that over time, more difficulties will arise that could undermine confidence in English courts. He points to a recent ruling in a Swiss court in which an English ruling was not upheld, which he believes shows “the rough ride ahead of UK rulings to be enforced across Europe … I’m afraid Brexit has brought a goat track that was a highway to British judgments. “

Others are more optimistic. Devine says that “trust in our judiciary”, which is considered “indestructible” and “experts in the commercial field”, should mean that Britain retains its appeal.

However, Devine and others have major concerns about Britain’s status outside Lugano.

Catherine McGuinness, political chair of the City of London Corporation, believes the biggest losers will be people seeking justice as consumers or in their personal lives.

“I would be more concerned about the consequences for ordinary people and smaller businesses operating across borders,” she says, adding that very large companies will be able to change their contracts to ensure they are still working.

“It’s the person who buys something across borders or considering how to separate from their partner across borders who will find that they do not have access to this truly pragmatic route to clarify their legal situation.”

Sarah Garvey, chair of the Law Society’s International International Law Committee, agrees that strained political relations between the UK and the EU will not have such a negative impact on large commercial contracts, but could seriously harm those seeking legal recourse as consumers or in family disputes.

“There was initial concern among commercial parties that English judgments would be more difficult to enforce in the EU. But they have been reassured by the United Kingdom, which accedes to the Hague Convention and has adapted their contracts.”

In addition to the high business costs, reputation, and individual costs of Johnson himself, there is also a strong potential for personal embarrassment. It would be a political nightmare for Britain’s Prime Minister, an architect for Brexit, to be seen as the mercy of the very Eurocrats from whom he claims to have saved the British in 2016.

“It’s politically uncomfortable for Johnson that the EU is starting to react to what it sees as our bad behavior,” said Anand Menon, a professor of international politics at King’s College London.

“Many Brexiters said from the start of the Brexit process that London, which took a hard line, would not result in retaliation from Brussels. This is one of the first examples where we are being damaged internationally and the EU has the keys, and it gives us an idea of ​​how much they think our reputation has changed, ”he adds.

This discrepancy seems to be driven by political disputes between Britain and the EU, and critics on both sides are quick to point out that the people most affected by this are British and European citizens.

“In cases involving victims of corporate human rights abuses, business versus consumer law and family law – in these cases, the party with more financial resources can try to put in place arguments about which country to deal with and a UK court decision. can be enforced, “said Zach Meyers, a researcher at the Center for European Reform. “I think the Commission is short-sighted in treating this only as a way of withholding a favor from the United Kingdom, because this will not only negatively affect the United Kingdom, it will also affect EU citizens.”

Unfortunately, relations between Brussels and London are bleak. The United Kingdom is currently trying to renegotiate an important part of the Brexit agreement, which Johnson himself signed in 2019, which once again unites EU member states against Britain.

The official position of the British government remains that it wants to rejoin Lugano. Downing Street says the convention is not something that should be politicized by the EU and Britain should be admitted as soon as possible. Less humble request to join, more anger at Brussels trying to punish it for Brexit.

A Downing Street spokesman told CNN: “We maintain that we meet the criteria for accession, both because it is open to non-EU countries and all non-EU members who already supported UK membership. Support for UK accession is the sensible and pragmatic solution for all citizens. “

This incredibly important topic is likely to rumble for some time. It may not be as exciting as sausage wars or fishermen hitting each other’s boats, but over time the consequences of a bad relationship between London and Brussels will become far more obvious to citizens on both sides.

The question for both parties now: how long can you maintain political positions that ultimately hurt your own citizens with the sole purpose of saving face and making a point?

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