Note: On 23 June 2016, the UK held a referendum on its membership of the EU, with a 52% majority voting in favour of the UK leaving the EU. This is a momentous decision with wide ranging implications for UK and EU law. The full impact of the UK’s decision to withdraw from the EU remains to be established and the EU and UK domestic legal landscape will continue to change throughout the withdrawal process if and when it occurs. The legal references in this blog are accurate as at the date of writing, 2nd July 2016.
As someone who loves to travel personally and who conducts a number of business dealings with overseas clients every year, the thrill of being exposed to other cultures, for either personal or professional reasons never leaves me. When plans go right – i.e. the holiday is perfect or the deal concludes without a hitch, I feel exhilarated that I have enjoyed or worked with people and processes which are the same, yet profoundly different.
But when things go wrong – the delays, frustrations and mishaps one can experience trying to straighten matters out can be maddening.
Whether the problem relates to a personal injury that occurred whilst on holiday, a breach of business to business agreement or someone from another country owing you money, you can seek redress–the question is how?.
International commercial contracts
If you are entering into an international business contract, you need to consider a number of key issues during the negotiation period. Although these may seem cumbersome, and may mean negotiations do not conclude as quickly as they do in domestic contracts, ensuring adequate consideration is given to each point could save you thousands of pounds in the long run.
Parties to a cross-jurisdictional agreement should consider:
- agreeing a chosen country that disputes will be resolved in.
- the applicable law to be used for resolution of any disputes under the contract and whether to make specific provision for this in the agreement (looking at the pros and cons)
- the legal regimes for determining the applicable law where the parties fail to reach a valid agreement.
- the relevant formalities for executing the agreement, which may involve notarisation and legalisation depending on the relevant legal processes involved
When dealing with international disputes, there may be a number of laws which may be of relevance to the parties. For example, the law of the different countries in which each party is situated or the law of the country in which performance of the contract is required.
When it comes to settling disputes in international commercial contracts, English law is one of the most widely used due to its reputation for procedural fairness and its extensive precedence of commercial law judgments developed over the centuries. French, German and Swiss law are also popular and although these are civil law systems (as opposed to common law), both systems offer similar protection to commercial parties.
If a commercial contract is between two EU member states, the question of which EU Member State’s courts should have jurisdiction over a dispute is currently governed by the Recast Brussels Regulation (1215/2012) for proceedings issued on or after 10th January 2015, and the old Brussels Regulation (44/2001) for proceedings issued before that date.
Under the Recast Brussels Regulation, where a contract contains an exclusive jurisdiction clause in favour of an EU Member State’s courts, it is for the courts in that state to determine whether they have jurisdiction to hear a dispute arising out of the contract. Any proceedings issued in other Member States must be stayed until the question of jurisdiction is determined. Where there is no exclusive jurisdiction clause, the court first ‘seised’ (i.e. where the document instigating the dispute were first lodged) of a dispute will determine whether it has jurisdiction, and proceedings in other Member States must be stayed.
As well as deciding the governing law, parties will need to choose whether to resolve the dispute by litigation or arbitration (if less expensive forms of dispute resolution such as negotiation and mediation have failed).
Litigation, as well as being incredibly expensive, can also put one of the parties at a disadvantage if they are unfamiliar with the language, judicial system and customs of the country which has been chosen as holding the governing law. Arbitration mitigates this disadvantage as the proceedings can be held in any country (and the governing law will be applied) and the parties are free to choose the language and certain procedures.
Someone outside the UK owes you money
If you are owed money by someone who is residing in another EU member state, then making a claim is relatively simple; by filing a European Payment Order on the debtor. If the debtor does not dispute the debt, then the European Payment Order will become automatically enforceable. A copy of the order, and if necessary a translation, must be sent to the enforcement authorities of the relevant Member State. How the debt is enforced will depend on the laws relating to debt recovery in the Member State.
The UK also has a number of reciprocal debt enforcement agreements with countries such as Canada, which makes it easy for creditors to recover their money.
If the debtor resides in a country outside the EU, or in a nation that does not have any reciprocal agreements with the UK, you will need to seek experienced legal advice.
Personal Injury Claims
In everyday practice, an accident abroad will often have occurred whilst the victim was on a package or travel tour/contract which is regulated by the Package Travel, Package Holidays and Package Tours Regulations 1992. If these Regulations apply, the claimant will be entitled to a local remedy and the English courts will have jurisdiction.
The Package Travel Regulations give a claimant, who can prove that he or she sustained an accident on a regulated package holiday, the right to issue proceedings in a UK court as long as he or she can prove:
- the package holiday was sold or offered for sale in the UK
- the package holiday included a combination of at least two elements of transport, accommodation and an additional significant tourist service (such as a tour around local attractions)
- the holiday was prearranged
- the holiday was sold or offered for sale at an all inclusive price
- the service included overnight accommodation or covered a period in excess of 24 hours
You are also entitled to make a claim if the package holiday was given to you as a gift.
To bring a successful claim you will need to prove that the accident was a result of negligence on behalf of the organiser of the package holiday or one of their representatives (such as a hotel owner). To give an example, if you slipped on a wet floor in your hotel and there were no signs warning you of the danger, you can make a claim. But if you have had one too many drinks on a hen’s night in Amsterdam and fell into a canal, it is unlikely you will find a sympathetic UK judge who will hear your case.
Victims of road accidents that occur in Europe can often claim compensation in the UK.
Outside the Package Travel Regulations, the question of jurisdiction is more complicated. The general rule for all personal injury claims where the cause of action date is after 1st May 1996 is that the law of the country where the accident occurred will apply. This is why travel insurance is imperative, even if you are just popping over to Paris for a weekend. Often, the cost and time involved in suing a company in a foreign jurisdiction is simply not worth the compensation you may receive if you are successful.
For the sake of brevity, this article only covered three instances where it may be necessary for a UK citizen to sue someone abroad. Of course, there are many other situations where legal action may be required. As long as Britain remains part of the EU, it is relatively easy and straightforward to take action against people or organisations in other Member States. Outside of this, assuming there are not reciprocal agreements, obtaining compensation and justice is much more difficult.
This is yet another reason why any decision by the next Prime Minister to trigger Article 50, the action which will formally start Britain’s exit from the EU, needs to be considered very carefully.
Saracens will keep you informed of any developments in this, and all other areas of law in which we practice.
Saracens Solicitors is a multi-service law firm based in London’s West End. We have dedicated and highly experienced commercial and corporate law specialists who can assist you with any questions you have regarding taking legal action against someone abroad. For more information, please call our office on 020 3588 3500.