Issues of governing law and applicable jurisdiction arise frequently in cross-border insurance disputes and can be costly and time-consuming, distracting the parties from focussing on the substantive dispute at an early stage.
Furthermore, in the absence of a clear choice of law, parties cannot be certain how their contract will be interpreted and, therefore, what cover they are giving or acquiring. To reduce this ambiguity and scope for dispute, it is important that consideration is given to these issues at the time of placement and that policies include express choice of law and jurisdiction clauses. In the absence of such clauses, the forum and applicable law is determined, within the EU, by the rules set out in various EU instruments (including the Rome I and Rome II Regulations on choice of law and the Recast Brussels Regulation on jurisdiction). The EU rules are highly prescriptive and largely mandatory and can limit the impact of express choice of law/jurisdiction clauses in insurance contracts.
The issue of the rules which the UK courts will apply to judicial co-operation with the EU in the post-Brexit landscape has been clarified to some extent by the recent publication of the government’s position paper responding to that published by the European Commission in June. The UK’s position paper does not make any specific proposals as to jurisdiction and enforcement of judgments between the UK and EU countries, but recognises that the most appropriate way to ensure legal certainty for UK and EU citizens and businesses and to support continued cross-border trade, is to reach an agreement that reflects the substantive principles of co-operation under the current EU framework. Further, it is proposed that the Rome I and II Conventions will be incorporated into domestic law, meaning that effectively there will be no change in the rules determining which law governs the parties’ relationships. The government also proposes to continue to participate in the Hague Conventions as regards international civil judicial cooperation and the Lugano Convention, which deals with jurisdiction and the recognition and enforcement of judgments between the EU and Norway, Iceland and Switzerland.
Clearly it is in the best interests of UK and EU businesses that there remains a close and comprehensive system of civil judicial cooperation after the UK’s withdrawal from the EU and it seems likely that this will largely mirror the current EU system but we will report on developments on www.inceinsurance.com as the negotiations continue.