Enforcement of court judgments in the UK, the EU and Turkey after Brexit & enforcement strategy

For many years, commercial parties across the globe, and particularly in Europe, have preferred to enforce their English law-governed agreements, and resolve their disputes, in the courts of England. This combination has been selected for many good reasons, including: the independence and expertise of the English judiciary and the efficiency of the court process; and the existence of a solid body of law (including general contract law principles), applied by the courts with care and predictability.

Accordingly, parties can assess the legal effect of contractual terms in advance – a considerable contrast to a non-precedential system – and English law applied by the English courts generally gives effect to parties’ contractual bargain and admits limited scope for implied terms or influence by public policy changes. Indeed, as almost all the central principles of English contract law derive from English common law (rather than EU law), the advantages of English law remain after Brexit. Further, the validity and effectiveness of a contractual choice of English law, whether in England or in the EU member states is not affected by Brexit.

In an article co-authored with Turkish Law Firm Pekin Bayar Mizraihi and published on our firm’s website, Craig Tevendale and Hannah Ambrose consider the position as to enforcement of English judgments in the UK, the EU and Turkey, and comment on the importance of an effective enforcement strategy. Click here to read the article.

Brexit: key practical implications for disputes and dispute resolution clauses

Despite the UK and EU having finalised a Trade and Cooperation Agreement to govern their trading and security relationship following the end of the Brexit transition period, there remain a number of uncertainties when it comes to commercial dispute resolution in cases involving the UK and the EU. In this post we look at some key practical points for parties to consider, taking into account both what we do know and what remains unclear.

The main source of uncertainty arises from the fact that the EU has not yet indicated whether it will consent to the UK’s accession to the 2007 Lugano Convention. It was hoped that a post-Brexit trade deal would pave the way for a further agreement on the UK’s accession to that Convention, but a month on from agreement being reached on the trade deal we are still waiting for a decision.

The position should become clear by April, since the UK submitted its application for permission to accede on 8 April 2020 and the Convention provides that contracting parties “shall endeavour to give their consent” within a year – though that is not a hard deadline. If consent is given, the Convention will come into force as between the UK and the EU on the first day of the third month following the UK’s deposit of its instrument of accession, and will apply to proceedings commenced after it comes into force.

In the meantime, two things are clear: (i) the recast Brussels Regulation no longer applies to jurisdiction and enforcement of judgments as between the UK and the EU, unless proceedings were commenced in a UK or EU court before the end of 2020; and (ii) the UK re-joined the 2005 Hague Convention on Choice of Court Agreements in its own right from 1 January 2021 (having previously been party to it by virtue of EU membership) so that the 2005 Convention now applies as between the UK and the EU in matters falling within its scope (as explained below).

Against that background, below are some key practical points for parties to consider in matters involving the UK and the EU. Continue reading

Article published – Does the Hague Choice of Court Convention 2005 apply to asymmetric jurisdiction clauses?

With the end of the Brexit transition period on 31 December 2020, and the lack of clarity as to whether the EU will consent to the UK’s accession to the Lugano Convention, attention is focused more than ever on the Hague Convention on Choice of Court Agreements 2005. Hague 2005 is however subject to a number of limitations, not least that it applies only where there is an exclusive jurisdiction clause in favour of the court of a contracting state. The accepted view among most commentators is that “exclusive” for these purposes does not include asymmetric or one-way jurisdiction clauses of the sort often favoured by finance parties, but some recent English decisions have queried whether that is in fact the case.

Anna Pertoldi has published a post on Practical Law’s Dispute Resolution Blog in which she considers the position. Click here to read the post (or here for the Practical Law Dispute Resolution blog homepage). Or for more information on the impact of Brexit more generally on commercial litigation involving the English courts, see this previous post on Litigation Notes.

Beyond Brexit: Countdown to 1 January 2021 – new video briefings and podcasts available, including on jurisdiction and enforcement of judgments

In the run up to the end of the Brexit transition period, we have produced a series of webinar videos which cover some of the key issues businesses face as they prepare for 1 January 2021, whether or not there is a new UK/EU trade deal. In addition to the webinar on jurisdiction and enforcement issues, there are further videos which can be accessed here on our website. These cover: trade in goods and services; retained EU law; mobility; contracts; intellectual property; data; media; technology and telecommunications; and tax.

We have also produced podcast versions of these video briefings, which are available on our Beyond Brexit podcast channel (see episodes 19-28), or click here for direct access to the podcast version of the briefing on jurisdiction and enforcement issues.

 

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

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