If you are forced to initiate litigation against a party and ultimately obtain a judgment in your favour, sometimes you have to take steps to enforce that judgment. Following our departure from the European Union, the enforcement of cross-border judgments has now become more complex. The main EU instruments on jurisdiction, namely the Recast Brussels Regulation (1215/2012) and the Lugano Convention, no longer apply to civil and commercial cases for which proceedings have been commenced after 1 January 2021. The EU-UK Trade and Cooperation Agreement, agreed in December 2020, does not make any long-term provisions in this area either.
Whilst the rules governing cross-border enforcement between the UK and EU are presently less clear-cut in the wake of the transition period, it remains vitally important for businesses who are engaging in international trade or contracting across borders to understand the applicable framework.
Proceedings commenced before 1 January 2021
The UK and EU will each continue to enforce the judgments of the other for proceedings issued before 1 January 2021.
Article 89 of the Withdrawal Agreement provides that judgments of the European Court of Justice (CJEU) shall have binding force in the UK. Decisions adopted by institutions, bodies, offices and agencies of the EU before the end of the transition period and addressed to the UK are binding within the UK, according to Article 95 of the Agreement.
Similarly, UK judgments in respect of proceedings issued before 1 January 2021 will continue to be enforceable in other member states, pursuant to Article 67 of the Agreement. They have traditionally been enforceable in EU member states under the Recast Brussels Regulation. This Regulation allows all EU member states to register a judgment and have it enforced in another EU member state as though it were a decision of that member state’s own courts.
Proceedings commenced after 1 January 2021
The situation became more complex at the start of this year. Articles 89 and 67 of the Withdrawal Agreement do not make allowance for judgments to be binding in proceedings started after 1 January 2021. While there is no overarching agreement between the EU and UK regarding jurisdiction and continued enforceability of judgments, there are several other avenues for businesses to consider.
The Hague Choice of Court Convention 2005
The UK has already acceded to the Hague Convention 2005, which may help where the parties have elected an exclusive choice of court within a contract underlying any dispute. The Hague Convention requires that any judgment granted by a court stipulated in an ‘Exclusive Jurisdiction’ clause of contract will be recognised and enforced by the other member states that are a party to the Hague Convention. It also prevents parallel proceedings taking place in another contracting state. The Hague Convention, while providing some enforcement, is however less conclusive than the previous regime.
The Lugano Convention 2007
The UK also applied in April 2020 to accede to the Lugano Convention as an independent member. This requires the consent of all contracting parties to the Convention and, if successful, will go some way in clarifying the position on jurisdiction of national courts and the cross-border enforcement of judgments for the UK. The regime under the Lugano Convention is substantially similar to that under the Recast Brussels Regulation but applies to additional countries outside of the EU such as Iceland, Norway and Switzerland.
Bilateral or existing agreements with other countries
Other than potential internationally binding agreements, another possible route to enforce EU judgments would be reliance on an existing bilateral agreement which provides for a different procedure. The UK is party to a number of pre-Brussels Convention treaties with certain other EU and EFTA member states, which were incorporated into English law under the Foreign Judgments (Reciprocal Enforcement) Act 1933 (FJA) and the Administration of Justice Act 1920. It is also important to consider whether any specific reciprocal agreements exist with other countries in respect of the enforcement of judgments. For example, the UK and Norway entered into such an agreement in October 2020.
The enforceability of foreign judgments under common law
The final aspect to consider is that many EU member states enforce foreign judgments through national legislation. In the UK, in the absence of any reciprocal agreements with other countries, it is possible to enforce foreign judgments under the common law provided certain criteria are met. Briefly, these are that only monetary judgments which are final and conclusive are enforceable.
It is evident that the path to clarifying disputes over jurisdiction and the enforceability of EU and UK judgments following Brexit is by no means straightforward. Should the UK successfully accede to the Lugano Convention, there should be greater clarity. The scenario is, however, fluid for the time being.
In the meantime, there are applicable provisions that businesses should consider when it comes to cross-border disputes with a European dimension. In any event, businesses will need to be particularly wary for the foreseeable future and should seek legal advice in order to mitigate the risk of further disputes.
The following practical recommendations may also be of assistance:-
- Review, and potentially revise, existing contractual dispute resolution provisions to take account of the UK’s new position. If it appears that you may need to rely on the provisions of the Hague Convention to enforce a judgment it is worth ensuring that the y jurisdiction clause is sufficiently certain.
- Provided it is viable it may also be advisable to consider electing arbitration as the preferred means of alternative dispute resolution in commercial contracts in the immediate future. A binding arbitration may streamline disputes and circumvent arguments over international jurisdiction.
- Seek local law advice within the jurisdiction. It may be that locally qualified counsel are able to advise as to the most efficient and cost-effective mechanism for enforcement.
If you have any queries or we can assist in any way with the matters outlined above please speak to Ailsa Clelland or Will Bainbridge.