International & Commercial Litigation
Jurisdiction and Enforcement of EU Judgments after Brexit
- this applies not just to EU parties
Following the end of the Brexit transition period (31 December 2020), the various EU treaties applicable to jurisdiction and enforcement of judgments from EU countries no longer apply to the UK. Those issues will be determined under the common law rules and, where it applies, the Hague Convention on Choice of Court Agreements (2005).
The 2007 Lugano Convention is not included in the transitional provisions in Article 67 of the withdrawal agreement. The 2020 Exit Regulations do not remove the provisions in the 2019 Exit Regulations providing for the application of the 2007 Lugano Convention by the UK on a unilateral basis to transitional cases.
For the UK to re-join the Lugano Convention, the consent of all of the existing parties will be required. All existing parties have given that consent apart from the EU (and Denmark, which is treated separately for these purposes despite being an EU member). It is difficult to see why such consent has not yet been given, as it creates some uncertainty which may have to be resolved by litigation in individual cases, probably covering a short time period. This will affect arguments on which court has jurisdiction in a particular case and the enforcement of judgments between courts in different EU countries, probably over a fairly short time period.
Prior to Brexit, the EU regulations, which have now ceased to apply, any court other than the court first seised had to decline jurisdiction, until such time as the court first seised decided whether or not it had jurisdiction. The court first seised was the court in which the proceedings had first been issued, where proceedings were issued in the court of more than one country.
This change will also have an effect on litigation in which one or more of the parties was not resident or doing business in one of the states to which the recast regulation applies. In other words, issues arise affecting parties based in the UK as well as other non-EU countries.
Jurisdiction and Enforcement of Foreign Judgments
After Brexit, the position reverts to that which applied before the regulations. This means that jurisdiction and the enforcement of judgments is instead determined by common law and statute, which has always applied to cases falling outside the European regime, and (where it applies) the Hague Convention.
Jurisdiction under the common law is generally founded on service of process (either within or outside the jurisdiction) or submission to the jurisdiction by the defendant, by prior agreement, for example in a contract, or by participating in proceedings. Where the defendant is outside the UK, it is necessary to seek the permission of the court to serve proceedings outside the jurisdiction. Such permission will only be granted if the subject matter of the dispute has a sufficient connection with England.
The Hague Convention does not contain any rules relating to jurisdiction in situations other than exclusive choice of court agreements, and does not contain any rules relating to jurisdiction in the absence of party choice.
The courts will also need to resolve two issues – (i) the precise ambit of what does or does not constitute an “exclusive” jurisdiction agreement, and (ii) when the Hague Convention took effect.
The UK government has adopted the position that the 2005 Hague Convention applies to choice of jurisdiction agreements entered into on or after 1 October 2015 (when the convention first came into force in the UK by reason of its EU membership). There are potential difficulties as to the rules governing contracts pre-dating October 2015 which could still very easily be the subject of litigation. The EU’s position is that the Hague Convention 2005 relating to the UK is applicable only to choice of jurisdiction agreements entered into on or after 1 January 2021 (when the UK began to apply the Convention as a party in its own right). Whatever position is reached on this question in the English courts, there may still be issues regarding enforcement of English judgments in EU countries.
The basis on which the English courts may have jurisdiction over a dispute under the common law, includingthe rules relating to service outside the jurisdiction, are arguably less certain and predictable than those that apply under the European regime. Therules contain an element of discretion under which the court can take into account issues of forum non conveniens.
Some old bilateral agreements still exist that provide for a different procedure. The pre-Brussels Convention treaties with certain 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 may still be applicable. However, this is likely to be the subject of litigation as these conventions were largely superseded by EU rules and have not been applied since 1987, when the Brussels I Convention took effect inthe UK.
Unfortunately, changes to the Civil Procedure Rules which have been made to take these changes into account are not yet in the White Book (the practitioner’s guide with notes) or on the Ministry of Justice website. Accordingly, great care will need to be taken until these resources properly set out the relevant rules.
For some period of time, there will be questions which will, no doubt, have to be settled by courts in the UK and various EU countries. After some time, it is to be hoped that the UK will have re-joined the Lugano Convention. There will be complexities surrounding the interim period. No doubt the operation of the Hague Convention will be clarified by judicial decision or other treaties will come into effect.
In the meantime, clients should consider reviewing jurisdiction clauses in long-running contracts, and pay great attention to choice of jurisdiction clauses in new contracts and the appropriate jurisdiction in which to bring any proceedings or consider disputing jurisdiction in appropriate cases, taking into account the law as it develops over the next few years.
For advice in any particular case, please do not hesitate to contact us.