knowledge | 29 April 2020 |
UK Application to Join Lugano Convention may not be Smooth Sailing
The UK has applied to join the Lugano Convention but may face EU opposition.
With the exit of the United Kingdom from the European Union, Brussels I Regulation (recast) will no longer apply.1 That regulation contains common rules governing the jurisdiction of courts and the enforcement of judgments in civil and commercial matters within the EU, and seeks to ensure legal certainty and predictability in litigation, by easily allowing a claimant to identify the court in which it may sue and a defendant to reasonably foresee the court in which it may be sued.2
In its capacity as an EU Member State, the UK was also a party to the Lugano Convention which operates in a similar way to the Brussels I Regulation (recast), but includes in its scope Switzerland, Norway, Iceland as well as the EU.3 However, the UK’s membership was also set to fall away with the UK’s exit from the block.
It was recognised early on that these changes would cause significant disruption to cross-border litigation and the UK signalled that it would seek to re-join the Lugano Convention in its own right. The UK received statements of support from Norway, Iceland and Switzerland for this plan and on 8 April formally applied to accede to the Lugano Convention post-Brexit.
However, this is not the end of the matter. The UK’s continued participation in the Lugano Convention is also subject to negotiation with the EU and Denmark.4 Article 72 of the Lugano Convention stipulates that a state will only be invited to accede to that convention where the unanimous agreement of the contracting parties has been obtained. These parties must endeavour to give their consent within one year. Media reports have now indicated that a quick and positive decision from EU Member States on the UK’s application is not a given.
This will be of interest to those involved in, or exposed to the risk of, UK court proceedings in respect of cross-border matters. For example, in the absence of continued UK participation in the Lugano Convention post-Brexit, common law rules on the enforceability of contractual choice of court provisions and of judgments could apply in cases that would currently be covered by that convention unless some other arrangement such as the Convention of 30 June 2005 on Choice of Court Agreements applied.5 This could greatly add to the length, uncertainty, complexity and cost of proceedings involving the UK.
How can we help?
The Disputes Group at McCann FitzGerald can assist clients in addressing all of the regulatory and/or litigation issues business may face in response to Brexit. Alternatively, your usual contact in McCann FitzGerald will be pleased to provide further information.
- Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters OJ L 351, 20.12.2012, p. 1.
- Case C-386/05 Color Drack  ECR 1-03699.
- This instrument mirrors the Brussels I Regulation, a precursor to the current EU instrument.
- Denmark has an opt-out of justice and home affairs under relevant EU treaties, but is a party to the Lugano Convention in its own right.
- The UK has indicated its intention to accede to this convention (known as the Hague Convention) in its own right once it ceases to be bound by it through the EU’s approval thereof. Having deposited its instrument of accession and various related declarations, it withdrew them upon its entry into of the Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community (the “Withdrawal Agreement”) in recognition of the fact that it would continue to be bound by the Hague Convention through the transition period provided for by the Withdrawal Agreement. In doing so, it indicated that it attaches importance to the seamless continuity of the application of the Hague Convention to the UK and intends to deposit a new instrument of accession at the appropriate time prior to the termination of the transition period provided for in the Withdrawal Agreement. The Hague Convention could potentially apply to certain future disputes currently encompassed by the Lugano Convention but it only encompasses exclusive choice of court agreements (and court judgments arising therefrom) and, further, none of Norway, Iceland and Switzerland is a party to the Hague Convention.
This briefing is for general guidance only and should not be regarded as a substitute for professional advice. Such advice should always be taken before acting on any of the matters discussed.