Choice of Jurisdiction clause in light of Brexit - a recent German decision

​​Brexit has now officially reached the lower level courts in Germany. Already courts have to deal with the potential effects on contractual cross-border relationships.

In a recent decision the district court of Koblenz (1 O 38/19, 07.05.2019) was confronted with the effect of Brexit on a contractual choice of jurisdiction clause. The claimant was an American company and the defendant a German-based company. The German company had become bankrupt and the claimant demanded surrender of certain high-tech equipment it bought which was still stored at the defendant’s premises.

The district court found a contractual choice of jurisdiction clause choosing English courts to be effective irrespective of a pending Brexit and therefore declared itself incompetent. The claimant had tried to argue that the choice of jurisdiction was void, since after Brexit there would be additional challenges in enforcing an English judgement in Germany. This would be worsening its legal position which had not been the basis for the original agreement. The court found however, there is no reasonable expectation for the German authorities to stop recognising English judgements even after Brexit. Hence, the clause remains effective and the claimant will have to file its claims again at a competent English court.

This decision once again shows, the uncertainty Brexits produces. Even though the decision can be supported wholeheartedly, the case does highlight one aspect of Brexit that needs to be kept in mind. The court is correct in finding, that the German authorities will probably recognise an English judgement even in case of a hard Brexit. Nonetheless claimants should keep in mind, that in this case enforcement will become more difficult, than it is under EU rules, since the respective European regulations, mainly EU regulation 1215/2012, will stop applying to English judgements. This means enforcement will be slower and less efficient. Claimants should most certainly be aware of this going forward, when accepting choice of jurisdiction clauses or initiating proceedings in the UK.

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.