Brexit | Jurisdiction and enforcement – What you need to know

Summary

The recent post-Brexit trade deal makes no provision for jurisdiction or the enforcement of judgments.

Therefore, the UK dropped out of the jurisdiction of the Brussels (Recast) Regulation (No. 1215/2012) on 31 December 2020.

The EU has not yet approved the UK’s accession to the Lugano Convention, but may do in the future.

Unless the transitional provisions from the Withdrawal Agreement apply, jurisdiction and enforcement of judgments will be governed by the Hague Convention 2005 if there is an applicable exclusive jurisdiction clause

If the Hague Convention of 2005 does not apply, then the UK and EU courts will apply their own national rules.

Judgments will continue to be reciprocally enforceable between the UK and Norway from 1 January 2021.

On the first day of 2021 the UK left the EU regimes with which European lawyers are familiar. We appeared to enter “uncharted territory”. Not so. In fact, there are charts for this territory – or maps, to use a more modern word. You just need to know which maps.

Whether you are a lawyer or a businessperson, in whatever country, you need answers to two questions. Which laws govern jurisdiction and enforcement of judgments between EU member states and the UK; and how should businesses act as a result?

What happened?

The EU and UK reached a post-Brexit trade deal, the Trade and Cooperation Agreement (“TCA”), on Christmas Eve 2020. The provisions of the TCA became UK law as the European Union (Future Relationship) Act on 31 December 2020. The TCA made provision for judicial cooperation in criminal matters, but did not mention judicial cooperation in civil matters, or jurisdiction and enforcement of judgments in civil and commercial proceedings.

So where do we look for law on those matters?

We look at the position immediately before Brexit. As every lawyer should know the Brussels (Recast) Regulation (No. 1215/2012) governed the enforcement and recognition of judgments between EU member states.

Also, the Lugano Convention 2007 governs jurisdiction and enforcement of judgments in commercial and civil matters between EU member states and Iceland, Liechtenstein, Norway and Switzerland. It operates in substantially the same way as Brussels (Recast) does between EU member states.

The UK was party to the Convention by virtue of its EU membership. Now that the UK is not a member of the EU, the contracting parties could agree that the UK could join the Lugano Convention as an independent contracting party, and there would be little change to the position on jurisdiction and enforcement. English jurisdiction clauses would continue to be respected and English court judgments would continue to be readily enforceable throughout EU member states and EFTA countries, and vice versa.

The problem is that the EU has not agreed to the UK joining the Lugano Convention

The UK submitted its application to accede to the Lugano Convention in its own right on 8 April 2020. But accession requires the consent of all contracting parties including the EU. Iceland, Norway and Switzerland have indicated their support for the UK’s accession, but the EU’s position is still not yet clear and the TCA is silent on this matter.

While the EU still may belatedly support the UK’s accession to Lugano, it does not currently apply. In any case, a three-month time-lag applies between agreement and entry into force, unless all the contracting parties agree to waive it.

Where are we now?

If the transitional provisions provided for by the Withdrawal Agreement as explained in my previous post do not apply, the Brussels (Recast) Regulation will not apply to jurisdiction and enforcement between the EU and UK.

If they do not, then you first need to decide whether the Hague Convention on Choice of Court Agreements 2005 is applicable. The Hague Convention 2005 applies between EU Member States, Mexico, Singapore and Montenegro. The Hague Convention first came into force for the UK when the EU acceded on 1 October 2015 and the UK re-acceded after Brexit in its own right with effect from 1 January 2021.

The Hague Convention 2005 applies if:

• The dispute falls within the scope of the Convention as provided for by Article 2 – e.g. the Convention does not apply to employment and consumer contracts or claims for personal injury;
• There is an exclusive jurisdiction clause within the meaning of Article 3; and
• The exclusive jurisdiction clause is entered into after the Convention came into force for the country whose courts are seized, and proceedings are commenced after the Convention came into force for the country whose courts are seized within the meaning of Article 16.

There is some uncertainty as to whether EU member states will treat the Hague Convention as having been in force from 1 October 2015, or only from when the UK re-accedes on 1 January 2021. The UK’s view is that the Convention will apply to the UK from 1 October 2015; the EU’s view is that it will apply to the UK from 1 January 2021. What is not in dispute is that for exclusive English jurisdiction clauses agreed on or after 1 January 2021, the contracting states will respect exclusive English jurisdiction clauses and enforce the resulting judgments.

If the 2005 Hague Convention does not apply, then the UK and EU courts will apply their own national rules to questions of jurisdiction and enforcement. In the UK, the rules will essentially be the same as the ‘common-law’ rules currently on enforcement applied to non-EU parties, for example the United States.

The Norwegian exception

The UK and Norway have reached an agreement which extends and updates an old mutual enforcement treaty, the 1961 Convention for the Reciprocal Recognition and Enforcement of Judgments in Civil Matters between the UK and Norway, which will apply if the UK does not re-accede to the Lugano Convention. The practical effect of this agreement is that judgments will continue to be reciprocally enforceable between the UK and Norway from 1 January 2021.

How should your business act now?

The applicable legal framework for each dispute will depend on the facts of each case. You should review the dispute resolution clauses in your cross-border contracts to assess how they may be affected by Brexit and to seek specialist advice where necessary. You should also seek advice on dispute resolution provisions when entering into new cross-border contracts in 2021.