Report of the Litigation Committee

A. Casalonga (FR), Chair

The Brexit

1. We are faced with the result of the British referendum which decided that UK should leave the European Union.

In order to effectively leave the EU, UK has to trigger Article 50 of TEU.

According to Ms. Theresa May, British prime Minister, this Article would be triggered by the end of March 2017. After that date, a time period of two years should be used by the UK and the European Union to negotiate the practical and legal implications of such a leave.

This time period ends in March 2019 i.e. shortly before the next elections to the EU Parliament which are scheduled for June 2019. It can therefore be expected that the deadline of June 2019 will be met and that any extension will be short.

What are the consequences of the Brexit for the UPC Agreement?

2. Since the UPC Agreement (UPCA) as it now stands, cannot enter into force as long as UK has not ratified, the Agreement is presently on standby.

3. The UK representative at the last Competitive Committee announced that UK would ratify the UPCA soon, i.e. before leaving the EU.

4. UK has recently ratified the Protocol on Privileges and Immunities, thereby confirming the will of UK to allow entry into force of the UPCA.

The entry into force of the UPC Agreement could therefore still be expected before the end of 2017, after ratification by the UK and Germany (France has already ratified).

5. The local division in London as well as the London section of the Central Division could be opened as soon as the UPCA enters into force. British judges could be nominated to act in the various divisions of the First Instance Court as well as in the Court of Appeal.

6. However, as soon as UK will leave the European Union, UK would cease to be a Contracting Member State of the UPC unless appropriate steps would have been taken before the effective leave.

What are the hurdles for the UK to participate to the UPCA after leaving the EU?

7. The obstacles to a participation of UK after leave, i.e. after having ceased to be a Member State of the European Union, are mainly those dealt with by Opinion 1/09 of the CJEU.

That opinion considered that the draft Agreement on a European and Community Patents Court 7928/09 of March 2009 was not compatible with the EU treaties. In this draft Agreement, the European Community (now European Union) was a party, thus opening a possibility for an opinion of the CJEU.

8. The CJEU was particularly concerned with the fact that the proposed jurisdiction would have been competent for the future Community patent (now Unitary patent)

9. Since the proposed Agreement related to a jurisdiction having competence not only for European patents but also for Community patents, the Court insisted in its opinion on the fact that it is essential to guarantee a direct cooperation between the CJEU and the national jurisdictions in view of a uniform interpretation of the Union law. Since the proposed jurisdiction replaced the national jurisdictions, this direct cooperation between the proposed jurisdiction and the CJEU would not be guaranteed.

10. In addition, according to the opinion of the CJEU, the liability of a Member State of the European Union should always remain in case of a violation of Union law by a national jurisdiction and therefore also by the proposed jurisdiction.

11. In its opinion, the CJEU also noted that the Benelux court was in a different situation since it is a jurisdiction which is common to several Member States of the European Union and therefore within the jurisdictional system of the European Union.

12. In its conclusion, the CJEU indicated that the proposed jurisdiction was not compatible with the EU treaties since it had an exclusive competence for actions relating to the Community Patent while being outside of the jurisdictional system of the European Union.

13. The present UPCA has been amended so as to take into account this opinion. In particular, only EU Member States are admitted as signatory States and Article 21 of the present UPCA concerning the requests for preliminary rulings before the CJEU has replaced Article 48 of the draft Agreement 7928/09 of March 2009.

What could be done to eliminate such hurdles?

14. According to the definitions of Article 2 UPCA, "Member States" used throughout the Agreement, means "Member States of the European Union". For example, Article 84 UPC clearly mentions that the UPCA is open for signature to "Member States" which means "Member States of the European Union". If, however, UK ratifies the UPCA before leaving the EU, as it now seems to be the case, Article 84 should not be an obstacle since the condition will have been fulfilled on the date of ratification of the Agreement.

15. Concerning the liability of the Contracting Member States, the UK should positively recognize its remaining liability.

16. The UK should also positively recognize the possibility of preliminary rulings by the CJEU and the full application of Union law by the UPC. This may be difficult since Ms. May clearly indicated in her speech and repeated in the Bill authorizing the UK government to trigger article 50, that the UK will not recognize anymore the jurisdiction of the ECJ.

Actions of the LitCom

17. The Litigation Committee is monitoring the situation resulting from the Brexit and will propose specific actions if it appears appropriate.

18. The LitCom is presently studying the UPC ITCMS (IT Court Management System) and will issue a position paper on the legal implications of the ITCMS in liaison with the OCC.

19. The LitCom is also studying the Draft Rules on mediation and arbitration and will issue a position paper on this question.