Brexit - Contractual considerations for recovering debts and litigating disputes

At the time of writing this article the final outcome of the Brexit negotiations hangs in the balance. Amidst the myriad of possible issues to consider, one area that tech companies may have overlooked is taking steps to improve their ability to recover outstanding debts post Brexit. Whether you are selling software, hardware or services into Europe there are several clauses in your standard terms and conditions you should review that may make life easier if you become embroiled in a dispute. 

At the moment it is not clear what has or will be agreed with the EU about the recognition, service and enforcement of proceedings issued in the UK Courts. 

Whilst there remains uncertainty, it would be worthwhile reviewing whether to make specific reference in your contract to the service of proceedings. One clause which is important to consider is requiring the party in the EU to instruct an agent in the UK to accept service of documents including any legal proceedings on their behalf. At the moment English court proceedings can be served on defendants in other EU Member States under the EU Service Regulation, which is straightforward and relatively quick. This EU Regulation will not apply to the UK after 31 December 2020 and any alternative is likely to be a more complex and lengthy process. The appointment of an agent removes the uncertainty about service of proceedings and will make the process speedier, cheaper and more straightforward.
 
Another consideration is the inclusion of an arbitration clause in your contract. The reason for this is that Brexit has no effect on the existing arbitration rules that apply in the UK. Whilst there is uncertainty over what rules will apply to the enforcement of court judgments, post Brexit the UK and the remaining EU Member States will continue to be a part of the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which is enacted in the UK by the 1996 Arbitration Act. Therefore, international enforcement of arbitral awards made in UK arbitrations will not be affected by Brexit and so will give some certainty to the contracting parties.