Brexit… Please don’t forget the back end when negotiating new trade deals

Yesterday saw the appointment of Oliver Robbins as Head of the EU Unit in the Cabinet Office (https://www.gov.uk/government/news/permanent-secretary-appointed-to-lead-the-new-eu-unit-in-cabinet-office). He will be on the front line in advising politicians on our options when negotiating the UK out of the E.U.

As a permanent secretary, his role is non-political and he will look at all possible options, with the pros and cons being put to our negotiators. Whilst the focus will understandably be on securing positive trade deals to allow the flow of goods, services and money in and out of the country, I would like to remind the EU Unit not to forget about what will happen when it all goes wrong and the purchaser (be it in the UK or overseas) doesn’t pay!

As things stand, businesses within EU member states (and the wider EEA) have the benefit of two relatively simply procedures to recover small debts due from a customer in another member state. A creditor can obtain a European Payment Order when the claim is uncontested, or can use the European Small Claims procedure for claims under €2000.  Whilst these procedures could be improved, at least they provide some protection to regular small traders when dealing with businesses and individuals elsewhere in the EU and the wider EEA.  The Brussels Regulations also give clear guidance on where disputes should be dealt with, when businesses/citizens from different member states are involved.

Leaving the EU may also mean negotiating new trade deals with counties outside the EU, something that the UK hasn’t had to do for over 40 years. At the moment, it is extremely difficult and often too costly to take steps to recover money owed from businesses and individuals outside Europe. In practice, unless a creditor is owed a large amount of money it is simply not worth the cost of trying to recover it.  If the Leave side are correct, leaving the EU will open up new trade opportunities outside the EU.  Government, when negotiating those trade deals, need to ensure that simple, cost efficient and clear procedures are put in place to allow creditors from both countries to recover that debt.  Oliver, please don’t forget the back end, it is really important!

Graeme Davy is a Partner in our Commercial Litigation Department, and Head of Debt Recovery. If you would like to discuss this article in further detail please contact Graeme on 01274 703 918 or at graeme.davy@gordonsllp.com