Important BREXIT announcement from the EU commission

Enforceability of UK Court Orders and status of UK Companies within the EU

Please note that the information herein is of a general nature and you should not act or refrain from acting on it without professional advice on the specific facts of your case. No liability is accepted by the author or Sykes Anderson Perry Limited in respect of this article. Taxation and law are complex subjects and the above is a basic outline only and is intended only as a general guide. Nothing herein constitutes financial advice.

The EU Commission has announced that as from the Brexit date:

  • Judgments made by UK courts will no longer be recognised and enforced in EU member states under the EU rules. Enforcement of judgments between the UK and an EU member state will be governed by the national law of the state in which enforcement is sought or by international Conventions where both the EU (or EU member states) and the UK are contracting parties. This means that if you obtain a court order from a UK court you will probably have to start fresh proceedings in the EU country involved to get a local court order which can be enforced in that EU country.

Tip Think now about getting judgment from the EU country in the first place.

Tip Think about changing your terms and conditions to provide that disputes are to be heard in the local EU court and not in the UK.

  • UK incorporated companies will not automatically be recognised as companies. EU countries will not be obliged to recognise the legal personality and limited liability of companies which are incorporated in the UK but have their central administration or principal place of business in the EU. UK incorporated companies may be recognised in accordance with each member state's national law or international law treaties. As a consequence, depending on the applicable national or international law rules, such companies might not have a legal standing in the EU and shareholders might be personally liable for the debts of the company.

Tip If you are a UK company doing business in an EU country you need to find out whether the UK Company is recognised in that country as having limited liability. If not you may decide to incorporate a company in that country or at least within the EU.

  • EU law on disclosure, incorporation, capital maintenance and alteration, and cross-border mergers will no longer apply to the UK. Consequently employees, creditors and investors dealing with UK companies will have to rely solely on the national rules of the UK for adequate safeguards.

Now may be a good time to review your terms and conditions and corporate structure.

November 2017
David Anderson
Solicitor-Advocate and Chartered Tax Adviser
Sykes Anderson Perry Limited