Christian Dwyer Global Head of Admiralty
The uncertainty continues… Post-Brexit recognition and enforcement of judgments: UK still seeking accession to Lugano Convention
Brexit transition period ends
On 31 December 2020, the Brexit transition period ended. As a result, the UK’s regime for recognising and enforcing judgments within Europe ceased to be governed by the Brussels regime, primarily the recast Brussels Regulation (EU member states), and the Lugano Convention 2007 (EU member states, Iceland, Norway and Switzerland).
These jurisdictional regimes had facilitated the recognition and enforcement of judgments in civil and commercial matters between the UK, the EU member states and the majority of EFTA countries. These regimes aimed to provide legal certainty and avoid time-consuming and expensive legal procedures before judgments could be recognised and enforced in a fellow member state. They also reduced the risk of undesirable parallel proceedings and promoted the effective cross-border recognition of judgments.
Application to accede to Lugano Convention
Recognising the advantages of having such a regime in place, on 8 April 2020, the UK submitted an application to accede to the Lugano Convention in its own right. Such an application, if successful, would mean that the UK would effectively retain its pre-Brexit position in terms of recognition and enforcement of judgments.
In order to accede, the UK requires the unanimous agreement of all current signatories to the Lugano Convention, namely the EU, Norway, Iceland and Switzerland. For the EU to consent, a qualified majority (i.e. 15 of the 27 member states) must be achieved in the European Council.
The response so far
The accession process has not proved straightforward. Although Norway, Switzerland and Iceland have all indicated during March/April 2021 that they consented to the UK’s application, the EU has not so far proved equally amenable.
Specifically, on 4 May 2020, the European Commission recommended that the EU should not consent to the UK’s application. It stated among other things that, in terms of third countries (i.e. non EU/EFTA/EEA countries), the EU relied on the provisions of the multilateral Hague Conventions and this was now also the correct approach in relation to the UK.
Subsequently, on 28 June 2021, the European Commission published a diplomatic note, indicating that it was not in a position to give consent, thereby in effect seeking to block the UK’s accession. The UK Government has expressed concern that it has not received any indication as to when to expect a final decision on the UK’s application. While it was hoped that the UK’s application would be considered at the European Council meeting that took place on 21/22 October 2021, this did not happen. However, as things stood then, it appeared that France would have opposed the application, Germany remained undecided but the Netherlands, Portugal, Spain, Belgium and Ireland were in favour.
Since then, on 18 November 2021, the European Parliamentary Research Service (the Parliament’s in-house research service and think tank) published a briefing paper on the matter. This explained that, from the EU's perspective and for the European Commission, accession was bound up with close economic integration with the EU. In the Commission's view, it should not be offered to any third country that was not part of the internal market. The briefing paper concluded that judicial co-operation between the UK and the EU would be governed, for the time being, by the national law of the UK and EU member states and the 2005 Hague Choice of Court Convention, but if, in future, both the UK and the EU acceded to the Hague Judgments Convention, this would facilitate the free movement of judgments in civil cases between the UK and the EU.
If the application is ultimately successful, the UK will accede to the Lugano Convention within three months. If it is definitively rejected, then a number of other options still remain available to the UK.
Hague Choice of Court Convention
First, the Hague Choice of Court Convention 2005, to which the UK has acceded in its own right on 1 January 2021. This Convention has been signed and ratified by the EU, Mexico, Montenegro and Singapore. It has been signed but not ratified by China, Israel, North Macedonia, Ukraine and the US. However, so far, Norway, Switzerland and Iceland are not signatories. Furthermore, the Convention is narrower in scope than the recast Brussels Regulation and Lugano Convention because it only applies in the case of exclusive jurisdiction agreements. It also only applies to contracts entered into after the Convention came into force in the state of the chosen court and does not apply to interim protective measures, such as injunctions, or to IP, consumer or employment disputes.
Hague Judgments Convention 2019
The Hague Judgments Convention 2019 has so far been signed only by Israel, Ukraine and Uruguay. However, the European Commission has adopted a proposal for the EU to accede to the 2019 Convention. The UK has also indicated that it intends to accede in due course. The 2019 Convention seeks to establish an international framework for the recognition and enforcement of judgments in wider circumstances than the 2005 Convention. In particular, no exclusive jurisdiction clause in favour of a contracting state is necessary, and employment and consumer contracts are within its scope.
However, the 2019 Convention will not come into force for any state for until 12 months after ratification and will not apply unless the proceedings were commenced when the Convention was in force for both the state of origin and the state of enforcement. Therefore, it will not have any practical impact for some time. Furthermore, there are broader grounds for refusing recognition and enforcement than under the Lugano Convention. In addition, the 2019 Convention covers enforcement only, not jurisdiction.
The UK can enter into appropriate treaties with individual states. Indeed, the UK already has in place a number of bilateral and multilateral treaties for the mutual recognition and enforcement of judgments.
Other statutory regimes
The Foreign Judgments (Reciprocal Enforcement) Act 1933 governs reciprocal enforcement with a number of jurisdictions, including Australia, India, Pakistan and Israel. The Administration of Justice Act 1920 applies in relation to many Caribbean countries and former British dominions, a number of African countries, as well as New Zealand, Cyprus, Malta and Malaysia among others.
Common law rules
In the absence of any applicable treaty or convention, common law rules apply. In broad terms, a foreign judgment will not be directly enforceable under the common law, but the judgment creditor can bring an action in this jurisdiction for a simple debt on the basis that the judgment creates a contract debt in its favour. The judgment obtained is then treated similarly to any other UK court judgment and is enforceable in the same way.
Arbitration proceedings do not come within the scope of the recast Brussels Regulation or Lugano Convention. Recognition and enforcement of arbitral awards, therefore, remains covered by the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958, which has around 168 contracting states, including the UK.
Relevant stakeholders, including the UK legal community, have expressed concern that if the UK is not allowed to accede to the Lugano Convention, this will affect the practical and effective recognition and enforcement of UK judgments abroad, as well as the relatively straightforward process by which EU judgments can be enforced here. It also brings into issue the recognition and enforceability of English High Court orders and injunctions in EU countries. It is important, therefore, given the current uncertainties to check the position with regard to recognition of English judgments and/or orders with lawyers in individual EU states on a case by case basis.
Clearly, the sensible and favourable solution for all concerned would be to allow the UK’s application. Indeed, many EU member states have already recognised that this is the best way forward and have expressed their support for the UK’s position.
Nonetheless, it must be accepted that there is a possibility that this may not happen, at least in the short term. In which case, the UK is not left without options. As outlined above, albeit far from ideal or straightforward, there are a number of alternatives which can be relied on.
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