knowledge | 18 July 2022 |
Brexit Latest: Enforcement of Judgments
The Council of the European Union has adopted a decision on the accession of the EU to the 2019 Hague Judgments Convention but a decision from the UK is still awaited.
With the exit of the UK from the EU, the general application of Brussels I Regulation (recast) fell away.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.
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 regime but includes in its scope Switzerland, Norway, Iceland as well as the EU.2 However, the UK’s membership of that convention fell also away with the UK’s exit from the block.
UK’s application to join the Lugano Convention
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. However, this was not the end of the matter. The UK’s renewed participation in the Lugano Convention is subject to the consent of the current parties to that convention. While the UK received statements of support from Norway, Iceland and Switzerland, signals from the EU were not promising. Ultimately, on 7 July 2021 the European Commission informed the Depositary of the Lugano Convention that the EU was not in a position to give its consent to invite the UK to accede to that convention.
That communication was swiftly followed up on 16 July with a proposal from the Commission that the EU should join the 2019 Hague Judgments Convention (“2019 Hague Convention”). The Commission had previously indicated its view that the 2019 Hague Convention along with 2005 Hague Convention on Choice of Court Agreements (“2005 Hague Convention”) should provide the framework for future cooperation between the EU and the UK in the field of civil judicial cooperation.3
The EU and the UK are already both parties to the 2005 Hague Convention. The Council of the European Union has now adopted a decision on the accession of the EU to the 2019 Hague Convention. To date, Costa Rica, Israel, Russia, Ukraine, the United States and Uruguay have signed this convention. However, it is not yet in force as this requires ratification or accession by two signatories with additional lead-in time after that. Once in force, all EU member states except Denmark will be bound by its terms. If the UK now also signs up to the 2019 Hague Convention, it too could apply to future judicial cooperation with the EU. It is still unclear whether the UK will take this step.
However, while the Hague Conventions do provide a way forward, they do not fill the entire vacuum left post-Brexit.
2005 Hague Convention
To take one example, the UK acceded to the 2005 Hague Convention in its own right at 00:00 Central European Time on 1 January 2021 (“UK Accession Time”). The key feature of jurisdiction and enforcement under this convention is that it gives effect to exclusive choice of court agreements in favour of contracting states, and provides that the resulting judgments will be recognised and enforced in other contracting states.
However, in general, the 2005 Hague Convention only applies where there is an exclusive jurisdiction clause entered into after the convention came into force for the country whose courts are chosen. In the view of the European Commission, this convention will apply to exclusive choice of court agreements in favour of the UK courts, only if concluded after the UK Accession Time.4 However, in the UK’s view, the 2005 Hague Convention will apply from October 2015 when it originally became a party by virtue of its EU membership.5 It remains to be seen what view the courts will take and the extent of the gap that will be left by the falling away of the Brussels and Lugano regimes.
Whatever the courts decide, other factors to consider here are that the 2005 Hague Convention does not cover the recognition or enforcement of non-exclusive or asymmetric jurisdiction clauses. The subject matter scope of the convention is also narrower than that of the Brussels or Lugano regimes.
2019 Hague Judgments Convention
Unlike the Brussels and Lugano regimes as well as the 2005 Hague Convention, the 2019 Hague Convention is not a double convention. While it deals with the recognition and enforcement of judgments, it does not address the jurisdiction of a court to hear a dispute in the first place. This means that there is a heightened risk of parallel proceedings in different jurisdictions when compared to the 2005 Hague Convention or the Brussels and Lugano regimes, although once the issue of enforcement comes into play, the 2019 Hague Convention does offer protection.
The subject matter scope of the 2019 Hague Convention differs from that of the Brussels and Lugano regimes. Grounds for refusal to recognise the judgment of a foreign court are also wider. These include public policy grounds that may feature more in a global convention than in a regional instrument such as the Brussels regulation.
Further limitations include the option under Article 29 for a contracting party to notify that it does not want the convention to apply between it and another contracting party. In addition, under Article 18, a contracting party may declare that it has a strong interest in not applying the convention to a specific matter. In that case, the convention will not apply in relation to that matter. The EU has declared in accordance with Article 18 that it will not apply the convention to non-residential leases (tenancies) of immovable property situated in the EU.
As mentioned above, there would also be a certain run in time before the 2019 Hague Convention would apply as a matter of course between the EU and the UK to judgments falling within its subject-matter scope.6
In the longer term, the Hague Conventions may mitigate some of the issues around cross-border civil and commercial litigation involving the UK. In the meantime, as things stand, most EU Member States, including Ireland, will enforce judgments from non-EU Member States under their domestic rules. However, there are exceptions and where enforcement is possible it may take longer, be more complex and allow for more limited types of judgment to be enforced. There may be grounds on which enforcement can be resisted which would not have been available under the European regime.
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.
- That regulation has some residual application for ongoing disputes and has limited continuing application to the UK as a “third State”.
- The Lugano Convention 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.
- See ‘Communication - Assessment on the application of the United Kingdom of Great Britain and Northern Ireland to accede to the 2007 Lugano Convention dated 4 May 2021’.
- Section 3.3 of the European Commission, Notice to Stakeholders Withdrawal of the United Kingdom and EU Rules in the Field of Civil Justice and Private International Law, 27 August 2020.
- On 28 September 2020, the UK deposited an instrument of accession to the 2005 Hague Convention together with a note verbale indicating that although the instrument of accession took effect at the UK Accession Time, the UK considers that it entered into force for it on 1 October 2015 and the UK is a contracting state without interruption from that date.
- For example, under Article 16 of the 2019 Hague Convention, it will only apply to the recognition and enforcement of judgments if, at the time the proceedings were instituted in the State of origin, that convention had effect between that State and the requested State. Under Article 29 there is also a delay of approximately 12 months post ratification before the convention can have effect between contracting States.
This document has been prepared by McCann FitzGerald LLP 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.