Businesses risk being thrown into legal chaos post-Brexit if deal doesn't ascertain how cross-border disputes will be settled, House of Lords warns

 
Hayley Kirton
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EU member states will no longer have to play ball legally, the House of Lords committee warned (Source: Getty)

Businesses risk legal headaches if the government does not consider how cross-border disputes will work post-Brexit, a report out today warns.

The House of Lords EU Justice Sub-Committee research cautions disagreements which span more than one country are currently settled with judgments that are enforceable across the EU as a whole, but it is less clear what the position will be the UK has left the bloc.

The peers go on to warn that, without the current system of "mutual recognition", businesses could suddenly find themselves held hostage to member states' national rules, while common law and earlier international agreements are still too uncertain to be relied upon.

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"Unless the government can agree a replacement of the existing rules on mutual recognition of judgments, there will be great uncertainty over access to justice for families, businesses and individuals," said Baroness Kennedy of The Shaws, chair of the committee.

"The committee heard clear and conclusive evidence that there is no means by which the reciprocal rules currently in place can be replicated in the Great Repeal Bill. Domestic legislation can’t bind the other 27 member states.

"We therefore call on the government to secure adequate alternative arrangements, whether as part of a withdrawal agreement or a transitional deal."

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The government has already announced it will be enacting a Great Repeal Bill, which will have the dual effect of repealing the European Communities Act of 1972 and writing all pieces of EU law currently in force in the country into the UK's own domestic law.

However, the House of Lords committee is arguing this would not go far enough, as it does nothing to ensure EU member states would return the favour and more clarity is need on this area.

The report has been published just days before Prime Minister Theresa May is thought to be triggering Article 50, which will spark the UK's formal withdrawal process from the EU.