State of Play
Prior to the UK’s exit from the EU (and until the end of the transition period) the legislative framework which governed the recognition and enforcement of judgements on civil and commercial matters remains the Brussels I Recast Regulation 1215/2012 and the 2007 Lugano Convention. Both are comprehensive European frameworks and have been valuable for eliminating complexities associated with cross border enforcement of judgments however as things stand neither are guaranteed from the end of the transition period.
From the 1st January 2021 the Brussels Recast Regulation will cease to have affect within the UK. This, there is no avoiding. The UK is no longer a member of the EU and so will no longer be party to EU Regulations in this area.
The UK is currently a party to the Lugano Convention by virtue of the its EU membership. It is a Convention on recognition and enforcement of judgments between the EU and EFTA states.
Accession to the Convention is not automatic – all parties will need to accept the UK’s self-standing status in this Convention and ratify the change.
The UK has recently announced it will seek to accede to the Lugano Convention. This statement of intent, whilst warmly welcomed by the legal profession, is just that - a statement of intent. The accession of the UK still needs to be negotiated and approved by all signatories: Iceland, Norway and Switzerland have already expressed their support for the UK’s accession but the EU has yet to do likewise.
The LSEW calls on both the UK and EU (alongside the EFTA signatories) to facilitate the ratification and operation of the Lugano Convention in time for the expiry of the transition period.
In parallel though, the UK legal profession will be following closely the development of another broadly similar international framework, the 2019 Hague Convention on the Recognition and Enforcement of Foreign Judgements in Civil and Commercial Matters (‘The Judgements Convention’).
Background to the Judgements Convention
The Judgements Convention was concluded on 2 July 2019 at the 22nd Diplomatic Session of the Hague Conference on Private Law. It is yet to be ratified by a single state and so is not currently operational.
With the exception of the 2005 Hague Choice of Court Convention, the Judgements Convention is the most substantial international framework governing the recognition and enforcement of foreign judgements in civil and commercial matters. Early support for the Judgments Convention appeared to be positive and on the day of its conclusion (as part of the closing ceremony) the Convention had its first signatory, Uruguay.
The decision on whether to accede to the Convention falls under the exclusive competence of the EU and preparatory steps for the ratification are being taken by the Commission.
On 10 February 2020 a consultation on the EU’s potential accession to the Convention was launched. The consultation process remains on-going, and the current timeline sees the Commission adopting its view on whether the EU should ratify the Convention in the fourth quarter of 2020.
Should the EU seek to start the accession to the Judgements Convention before the end of the transition period then the EU would sign on behalf of the EU28 (including the UK).
The Convention, as any international convention, will not however enter into force on signing, as a separate act of ratification is required. It is therefore extremely unlikely that the EU will sign and ratify the Judgements Convention before the end of the transition period.
By way of example, it took four years between the conclusion of the 2005 Choice of Court Convention and the EU signing it. And, another 6 years until the EU ratified it, meaning that the 2005 Convention entered into force in 2015.
Scope of the Judgements Convention
Article 1 of the Convention states that it applies to ‘recognition and enforcement of judgments relating to civil or commercial matters.’ The starting point is that the Convention will apply to most civil and commercial judgements. The Convention does however provide an exhaustive list of exceptions to the rule.
Article 2 sets out areas of law which are explicitly excluded from the scope of the Convention. This includes areas which are already covered by other, more specialised conventions or treaties (Article 23) such as, inter alia, family, intellectual property, defamation matters and areas where Member States have divergent laws and policies.
Article 7 of the Convention also sets out circumstances when recognition or enforcement may be refused and these include, inter alia, where the judgement was obtained by fraud, where the defendant was not notified of essential elements of the claim in sufficient time or where the proceedings leading to that judgement violate fundamental principles of procedural fairness.
Importantly, it will not be possible to apply the Judgements Convention retrospectively and so it will apply only to judgements which have been given after the Convention has come into force.
Consequences of accession to the Judgements Convention
First and foremost, accession to the Convention will enhance access to justice for citizens and businesses engaging in international activity, where the Convention is in force between the two parties. It will lead to the widening of the lawyers’ toolkit, where lawyers advising their clients in a cross-border dispute can help the client to choose mechanisms. This, in turn, may lead to a reduction in costs. It also provides enhanced legal certainty as judgments become more easily and predictably enforced. It is also likely that citizens and business would be encouraged by these factors and this may consequently lead to an increase in the number of international transactions.
The Judgments Convention is by no means an equivalent or substitute for the Lugano Convention or the Brussels Recast Regulation however it may become greatly beneficial, as a treaty with global reach in a time when the UK is looking to increase its exports worldwide.
Inevitably, the impact of the Judgements Convention will be directly linked to how many countries ratify it and bring it into force.
Should the UK follow through with its commitment to accede to the Judgements Convention, this would have many favourable outcomes for citizens, business and legal professionals, from providing enhanced access to justice, to reducing the friction associated with international transactions and providing greater legal certainty.
The full text of the Judgements Convention can be found here.