Chasing cross-border debts? Brexit means now is the time to act

UNTIL RECENTLY, IRISH creditors could reasonably assume that financial judgments awarded in Ireland could be enforced within all other EU member states, including the UK.

This gave Irish creditors comfort that they could swiftly and cost-effectively pursue UK-situated assets of a debtor after a judgement was obtained in Ireland.

A key aim of EU regulations is to facilitate access to justice amongst member states and for judgments to be easily recognised and enforced. However, this certainty ended following the outcome of the Brexit referendum in the UK.

How easy is cross-border enforcement now?

The current EU procedure is relatively straightforward. It requires an Irish creditor to obtain a certificate from the Irish courts which certifies that the judgment is enforceable, contains details of the judgment and sets out information about interest and costs.

The Irish creditor must serve the certificate and judgment on a UK debtor before enforcing it.

The Irish judgment creditor is then entitled to enforce that judgment as if it were a UK judgment, including referring it to a bailiff or High Court enforcement officer for execution, or registering a charging order on the judgment debtor’s interest in UK property.

Other advantages

It should be pointed out that a wide range of judgments, in addition to money judgments, are also enforceable under the EU regulations and the grounds to refuse enforcement are fairly limited.

A further advantage is that the regulations apply irrespective of where the parties come from. If, for example, the Irish courts gave judgment in a dispute involving a Mexican plaintiff and a UK defendant, it is enforceable across the EU, including the UK, where presumably the defendant’s assets are situated.

What will change?

The regulations will remain in force until the UK formally leaves the EU. After that, it will depend on what form the UK’s relationship with Europe takes.

The logical view is that the UK will enter agreements with the EU on issues such as jurisdiction, service, choice of law and, of course, on reciprocal recognition and enforcement of each other’s judgments, in the future.

However, if the EU and the UK do not specifically agree on an alternative arrangement then Irish judgments in the UK, and, vice versa, UK judgments in Ireland, will become subject to international conflict of laws rules.

The upshot of this will be that the Irish creditor will be required to commence fresh proceedings against the UK debtor in the English courts if the Irish creditor wishes to enforce his UK judgment there, rather than being able to rely on the Irish judgment itself.

Needless to say, this will make enforcement between Ireland and the UK both slower and more expensive.

Conclusion

Until there is more certainty as to the terms of the UK exit from the EU, the future for enforcement of Irish court judgments against the UK assets of judgment debtors remains unclear.

In advance of knowing more about any new arrangements that might be agreed, it is prudent for Irish creditors to take immediate steps to enforce a court judgment in the UK under the current regulations.

Similarly, if an Irish creditor has a claim (as opposed to a judgment) against an entity with UK situate assets, or if such a claim arises in advance of the UK’s formal exit, then the Irish creditor should move quickly to issue proceedings and obtain judgment on foot of that claim.

By doing so, they will be able to take advantage of the relatively fast and cost-effective enforcement mechanisms that currently apply.

The content of this article is provided for information purposes only and does not constitute legal or other advice.

Jason Harte is head of the debt recovery team at Mason Hayes & Curran.

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