High Court holds claim against anchor defendant must satisfy merits test if it is to be used to establish jurisdiction against co-defendants under recast Brussels Regulation

The High Court has held that the English court will only have jurisdiction against a co-defendant under article 8(1) of the recast Brussels Regulation where a merits test against the anchor defendant has been satisfied: Senior Taxi Aereo Executivo Ltda v Agusta Westland S.p.A [2020] EWHC 1348 (Comm). In doing so, it largely followed obiter comments by the majority in a previous Court of Appeal decision (Sabbagh v Khoury [2017] EWCA Civ 1120, considered here).

Under article 8(1), co-defendants domiciled in EU member states can be joined to proceedings commenced in England against an English domiciled defendant (the anchor defendant) where the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings.

There is no merits test in respect of the case against the co-defendants, but it has been unclear whether that is also the case in respect of the case against the anchor defendant. The majority in Sabbagh considered that there was such a test, but Gloster LJ gave a strong dissenting judgment, leaving the position in doubt. The judge in this case (Waksman J) held there is such a test, preferring the reasoning of the majority, although clearly the issue is ripe for consideration by the Court of Appeal or CJEU.

Although the recast Brussels Regulation will no longer apply in the UK after the end of the transition period following the UK’s departure from the EU (save in respect of proceedings started before the period ends), the decision will remain of relevance if the UK joins the Lugano Convention, as the Convention contains the same provision regarding co-defendants as the Regulation.

If the UK does not join the Lugano Convention, the decision will cease to have relevance, as the common law jurisdiction rules will apply to co-defendants. Under those rules, a merits test clearly does apply to the claim against the anchor defendant. Continue reading

Video published – Brexit: choosing a jurisdiction clause during the transition period

Anna Pertoldi has published a video for Practical Law in which she discusses the issues to consider when choosing a jurisdiction clause during the Brexit transition period. The video considers the advantages and disadvantages of exclusive, asymmetric and non-exclusive jurisdiction clauses during the transition period, as well as other possible clauses and the key points to bear in mind when choosing between them.

Click here to access the video on Practical Law’s website (free-to-view for the next 7 days and then available to Practical Law subscribers).

UK applies to join Lugano Convention from end of Brexit implementation period

On 8 April 2020, the UK submitted its application to accede to the 2007 Lugano Convention on jurisdiction and the recognition and enforcement of judgments, in accordance with the UK government’s previous statements of intention.

Lugano currently applies as between the EU (including the UK, until the Brexit transition period comes to an end – most likely on 31 December 2020 if the UK government’s recent statements on the point are taken at face value) and EFTA countries Iceland, Norway and Switzerland. The UK’s involvement in Lugano will however cease at the end of the transition period unless the UK accedes in its own right.

If the UK were to accede to Lugano, assuming no other agreement on jurisdiction and enforcement of judgments is concluded between the UK and the EU, Lugano would then apply as between the UK and the EU (as well as between the UK and other signatories). The result would be that there would be little change from the current regime in relation to jurisdiction and enforcement, so that English court judgments would continue to be readily enforceable throughout the EU and in EFTA countries, and English jurisdiction clauses would largely continue to be respected by those countries, and vice versa. (The Lugano Convention does have some disadvantages compared to the current regime, as it does not include the improvements made when the Brussels Regulation was “recast” for proceedings commenced from January 2015, as outlined here – but in broad terms the provisions are similar.)

The wrinkle, however, is that the UK will be able to accede to Lugano only if it has the unanimous agreement of the contracting parties – namely the EU, Denmark as an independent state (it has an “opt-out” of justice and home affairs matters under relevant EU treaties), Iceland, Norway and Switzerland. While Iceland, Norway and Switzerland have indicated their support for the UK’s accession, the EU’s position is not yet clear. It has recently been reported that the Commission at least may be less welcoming – in particular given that all current signatories are part of the EU’s single market or substantially participate in it, but the UK has said it intends to leave the single market once the transition period comes to an end.

If the UK does not accede to Lugano, the position regarding enforcement of English judgments and the effect of English jurisdiction clauses will depend, in part, on whether the 2005 Hague Convention on Choice of Court Agreements applies (assuming the UK accedes to that Convention from the end of the transition period – which it can do without the consent of the EU or any other contracting party). Otherwise, questions of jurisdiction and enforcement as between the UK and the EU will depend largely on local rules in each country. See this blog post for more information.

Anna Pertoldi
Anna Pertoldi
Partner
+44 20 7466 2399
Maura McIntosh
Maura McIntosh
Professional support consultant
+44 20 7466 2608

Video published – Brexit: jurisdiction and enforcement of judgments during and after the transition period

Anna Pertoldi has published a video for Practical Law in which she considers jurisdiction and enforcement of judgments during and after the Brexit transition period. The video discusses the current legal position and considers the practical implications for both jurisdiction and enforcement of judgments, as well as the practical implications of the agreements that might be reached, and the absence of an agreement, for jurisdiction, enforcement of judgments and choice of law.

Click here to access the video on Practical Law’s website (free-to-view for the next 7 days and then available to Practical Law subscribers).

New Brexit podcast – The implications of Brexit for choice of law, jurisdiction and the enforcement of judgments

In the latest episode of our Brexit podcast series, Anna Pertoldi and Maura McIntosh look at the implications of Brexit for choice of law, jurisdiction and the enforcement of judgments, looking first at the position during the transition period to the end of December 2020 and then considering what will happen once that period comes to an end. They also give some thoughts on how commercial parties should approach their decision as to what dispute resolution clause to include in their contracts.

The episode is available to listen to on SoundCloud, iTunes or Spotify.

Anna Pertoldi
Anna Pertoldi
Partner
+44 20 7466 2399
Maura McIntosh
Maura McIntosh
Professional support consultant
+44 20 7466 2608

Proceedings time barred where claim form issued but not served during applicable foreign limitation period

The High Court has held that proceedings were time barred where the claim form was issued in the English courts before the expiry of the applicable Greek limitation period, but was not served until after that period had expired: Pandya v Intersalonika General Insurance Company SA [2020] EWCH 273 (QB).

Whether proceedings had been brought within the limitation period was a matter for the applicable law, not a matter of evidence and procedure of the English court. Under Greek law it was necessary for proceedings to have been both issued and served to stop the limitation period running. As that had not happened, the claim was dismissed.

The clear message is that, where a foreign law applies to a claim, it is important to check not only what the limitation period is under that law but also what steps are needed to bring proceedings before it expires. Merely issuing proceedings will not be sufficient to stop time running if something more is required under the applicable law.

Although the present case was decided under Rome II, the EU Regulation which governs the law applicable to non-contractual obligations, the position will not change even after the Brexit transition period comes to an end. The English court will continue to apply the same rules, both as a result of transitional provisions in the UK/EU Withdrawal Agreement and because the UK intends to incorporate Rome II into English law as from the end of the transition period. Continue reading

Cross-Border Litigation: Latest update published

We are pleased to release the latest issue of our periodic publication “Cross-Border Litigation”, designed to highlight legal and practical issues specific to litigation with an international aspect.

Topics covered in this issue include:

  • Spotlight on recent developments
  • The new Hague Judgments Convention: A potential gamechanger (eventually)
  • Obtaining evidence from US-connected entities: US court widens the scope
  • Will an English judgment be enforceable in the EU27 post-Brexit?
  • The new Singapore Convention on mediated settlements: Some practical issues to consider now
  • Jurisdiction and governing law: Recent decisions

To download the publication, click here.

To read the previous issues, click here.

Jurisdiction and enforcement after Brexit transition – latest developments re UK’s accession to Hague and Lugano Conventions

As noted in our previous blog post, where English legal proceedings are started before the Brexit transition period comes to an end, most likely on 31 December 2020, a judgment obtained pursuant to those proceedings will be readily enforceable in the EU under the recast Brussels Regulations. After that, the position depends, in part, on whether the 2005 Hague Convention on Choice of Court Agreements applies and whether any further arrangements are agreed between the UK and the EU before the end of transition. Otherwise, the question of whether and how an English judgment is enforceable in the EU post-transition will depend on local rules in each country. Most (but not necessarily all) EU Member States will enforce foreign judgments even without a specific treaty or convention, although the type of judgment enforced may be more limited and the procedures may be more time-consuming and costly.

In that context, it is worth noting a couple of positive developments regarding the UK’s accession to the Hague Convention and, potentially, the Lugano Convention.

Hague: As anticipated, the UK has not yet re-acceded to the Hague Convention, as it would have done with effect from 1 February if there had been a “no-deal” Brexit on 31 January. The UK’s declaration submitted to the Hague depositary on 31 January notes that it is withdrawing its instrument of accession as, during the Brexit transition period, EU law, including the Convention, will continue to apply to and in the UK. It notes that the UK “attaches importance to the seamless continuity” of the Convention’s application, and states the UK’s intention to “deposit a new instrument of accession at the appropriate time prior to the termination of the transition period”. Assuming an end date of 31 December 2020, this means depositing the new instrument of accession by the end of September.

Where Hague applies, English judgments will be readily enforceable around the EU (and in the other Hague contracting states, currently Mexico, Montenegro and Singapore). However, the Hague Convention only applies where there is an exclusive jurisdiction clause which was entered into after the Convention came into force for the chosen state. As noted in our previous post (linked above) there is some uncertainty as to the Convention’s application to exclusive jurisdiction clauses in favour of the UK courts which were entered into before the UK re-joins Hague following the end of the transition period.

Lugano: The Lugano Convention currently applies as between the EU (including the UK, during the transition period) and EFTA countries Iceland, Norway and Switzerland. If the UK were to accede to the Convention in its own right from the end of the transition period (or thereafter), it would then also apply as between the UK and the EU. The result would be that there would be little change from the current regime in relation to jurisdiction and enforcement, and English judgments would continue to be readily enforceable throughout the EU and in EFTA countries. There would be no need to rely on the Hague Convention (which would continue to apply as between the UK and Mexico, Montenegro and Singapore) or on local laws regarding enforcement of foreign judgments in the relevant countries.

Unlike the Hague Convention, where accession does not depend on agreement with other contracting states, the UK’s accession to Lugano requires agreement from the EU, Denmark (which has an “opt-out” of justice and home affairs matters under relevant EU treaties), Iceland, Norway and Switzerland. It is therefore a positive development that the UK has received statements of support from Iceland, Norway and Switzerland for its intention to accede to the Lugano Convention, as the government announced on 29 January.

Anna Pertoldi
Anna Pertoldi
Partner
+44 20 7466 2399
Maura McIntosh
Maura McIntosh
Professional support consultant
+44 20 7466 2608

Brexit under the Withdrawal Agreement: The implications for disputes

It now seems inevitable that the UK will leave the EU on 31 January 2020 at 11pm GMT under the terms of the Withdrawal Agreement concluded between the UK and the EU on 19 October 2019. In this post, we consider the implications for commercial litigation involving the English courts, both during the transition period established under the Withdrawal Agreement (which ends on 31 December 2020) and following the end of the transition period. We have also updated our decision tree on the enforcement of English judgments in the EU post-transition, which you can access here.

Although the Withdrawal Agreement provides that the transition period may be extended for “up to 1 or 2 years” by agreement before 1 July 2020, the UK government has ruled out any extension in the legislation implementing the Withdrawal Agreement which is currently working its way through Parliament (the European Union (Withdrawal Agreement) Bill 2019-2020). That could be changed by further legislation, or a temporary arrangement could be reached between the UK and the EU to similar effect as an extension of the transition period, but for present purposes we have assumed that transition will end on 31 December 2020. At that point, what happens – in relation to disputes and many other areas – will depend largely on what, if anything, is agreed between the UK and the EU in the interim. There are, however, a number of respects in which transitional provisions under the Withdrawal Agreement will continue to affect the position after the transition period itself comes to an end.

It should be noted at the outset that arbitration with a seat in London will not be affected by Brexit. Arbitration is not regulated by EU law, and the UK and all EU Member States are signatories to the 1958 New York Convention. Accordingly, arbitration clauses will remain effective and arbitral awards will continue to be enforceable in the same circumstances as currently. Continue reading

A no-deal Brexit: The implications for disputes

As we approach the deadline of 31 October, it is difficult to predict what will happen. But the prospect of a no-deal Brexit – either then or at some later date – remains a very real possibility. In this blog post we consider the implications of such an outcome for commercial litigation involving the English courts. For these purposes, we assume an exit date of 31 October, but the same issues will arise if there is an extension to the current deadline followed by a no-deal Brexit at a later date.

We have also recorded a webinar which explores the issues in more detail, as part of our series of webinars exploring the implications for business of a no-deal Brexit. The series can be accessed here. Continue reading