Brussels is hitting British companies with extra charges of as much as £100,000 just to take a case to EU court, sparking fears that small firms could be cut off from justice.
The bloc is forcing UK businesses to pay so-called “security bonds” of at least £50,000 to courts in the EU in order to bring forward a claim after Brexit. Higher-value and more complex cases can require a bond of £100,000 or more, according to legal sources.
While the legal sector was one of the only branches of the professional services industry to have a dedicated section in the post-Brexit Trade and Cooperation Agreement, British firms have found themselves being treated by EU civil courts in the same way as businesses from other “third” countries, such as China.
Ministers have been in talks with EU officials about removing the requirement for UK litigants to lodge a security bond, but discussions have stalled in recent months, the Telegraph understands.
The introduction of the bonds have created fears that smaller British businesses will be unable to defend themselves in courts on the Continent due to the significant upfront costs.
Andreas Wietzke, a partner in the Munich office of City law firm Mathys & Squire, which specialises in intellectual property law, said Brexit has resulted in a huge change in the status of UK businesses trying to bring claims in the EU.
He added: “For British businesses, defending your intellectual property in the EU has become a much more costly affair since Brexit. This could have a chilling effect on actions by UK litigants in Europe, particularly for startups and SMEs with limited funding.
“For those in the UK with valuable patents or trademarks that are being infringed by businesses in Europe, the decision whether to pursue litigation is not quite so simple as it was before Brexit. Having to put up £50,000 or £100,000 to have your case heard in Germany, France or the Netherlands will give some of them pause for thought.”
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