Recognition & enforcement of judgments in civil & commercial matters post-Brexit: a daunting future?

After the UK’s official departure from the EU on January 31^st, 2020,¹ an ongoing transitionary period was entered into, in order to accommodate further negotiations for reciprocal agreements with the EU. However, no such agreements have yet been negotiated, and ‘if no new arrangements are agreed, this will lead to the loss of the reciprocal arrangements under the current regime.’²

Now, as we’re getting closer to the clock striking 12 on ‘IP completion day’ (December 31^st, 2020),³ and with yet no successfully negotiated reciprocal arrangements with the EU, the private international lawyer finds herself in uncharted territory. So, in hopes of shining some much-needed light on the future cross-border recognition and enforcement of judgments, this blog post will draw a brief map of what awaits on the other side of Brexit.

Current position:

The Brussels I (Recast) Regulation⁴ presently regulates jurisdiction and the recognition and enforcement of judgments⁵ in respect of civil and commercial matters.⁶ This provides a ‘straightforward procedure for reciprocal enforcement between EU member states’,⁷ therefore allowing for the direct enforcement & recognition of judgments across the EU.⁸

Secondly, the 2007 Lugano Convention,⁹ which currently enjoys direct effect within the UK ‘by virtue of the UK being a Member State of the EU’, governs jurisdiction and

enforcement matters in the same way as the Regulation did prior to being recast,¹⁰ though enjoys a wider scope, being applicable between third states/EFTA states (Norway, Iceland & Switzerland) and EU Member States.¹¹

Lastly, the 2005 Hague Convention¹² governs the recognition and enforcement of exclusive choice of court agreements, and ‘seeks to ensure the effectiveness’ of such agreements between commercial parties.¹³ This also enjoys enforcement within the UK by virtue of its EU membership, though is less impactful due to being more ‘limited in its application and scope.’¹⁴

Position post-Brexit:

According to the recent Civil Jurisdiction and Judgments (Amendment) (EU Exit) Regulations 2019,¹⁵ and its Explanatory Memorandum,¹⁶‘the Brussels Regime will cease to apply in the UK’,¹⁷ and the recognition and enforcement of judgments will fall to be determined by rules ‘already applicable to non-EU, non-EFTA cases.’ Nonetheless, the current regime will continue to apply to any actions commenced or in progress prior to completion day.¹⁸

What does this mean?

In short, ‘the Brussels I (Recast) Regulation will cease to apply in the UK, as will the entire European acquis,’¹⁹ namely the two conventions. This means any reciprocity of recognition and direct enforcement of judgments will be lost, which is likely to result in a ‘less straightforward process for the enforcement of UK judgments.’²⁰ This is quite tricky in terms of legal certainty, as EU courts will not be under any duty to recognise/enforce a UK judgment, and vice versa.²¹

Softening the blow:

As daunting as this seems, the UK has worked to mitigate the expected negative effects of Brexit. As confirmed by the 2019 Regulation,²² the UK has indicated that it will accede to the 2005 Hague Convention ‘in the event that a Future Relationship Agreement is not agreed.’²³ This already occurred in September 2020, when an instrument of accession was redeposited.

The UK also submitted a request to ratify the 2007 Lugano Convention in April 2020, so as to enjoy continued participation post-Brexit.²⁴ Accession would, however, be more difficult, as the UK would need to either become an EFTA state or accede directly & be dependent on the EU’s approval.²⁵ Regardless of this potential complication, the Lugano Convention ‘represents the best chance of minimal disturbance.’²⁶

Last, but definitely not least, arbitration will remain unaffected post-Brexit, as it is governed by a different treaty altogether, which will allow London to remain ‘one of the most popular and trusted arbitral seats.’²⁷

Where do we stand?

The post-Brexit picture is not all that pretty to behold. Nonetheless, the likely accession to the 2005 and 2007 Conventions is a source of comfort in the face of such daunting changes. In the longer term, the future ratification of the novel 2019 Hague Convention,²⁸ should the UK accede to it, is sure to further alleviate the loss of reciprocity enjoyed thus far.

References