UK government consults on joining Hague Judgments Convention 2019

The UK government yesterday launched a consultation seeking views on its plan for the UK to become a contracting state to the Hague Convention of 2019 on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters (Hague 2019).

The EU and Ukraine recently became the first states to accede to or ratify Hague 2019, as discussed here, which means that the Convention will apply to the enforcement of judgments between EU member states (other than Denmark) and Ukraine where proceedings leading to the judgment are commenced on or after 1 September 2023.

If the UK joins Hague 2019, it will apply also as between the UK, on the one hand, and the EU (other than Denmark) and Ukraine, on the other. However, there is a 12 month delay before Hague 2019 enters into force for any new contracting state, to give each existing contracting state a chance to (in effect) opt out of the application of the Convention between itself and the new state. So, assuming the UK joins, the Convention will only apply to the UK where the proceedings leading to a judgment are commenced after the entry into force date, which will be sometime in 2024 at the earliest.

Hague 2019 does not apply where the court which gave the judgment took jurisdiction under an exclusive jurisdiction clause, as in that case the 2005 Hague Convention on Choice of Court Agreements would generally take precedence.

The consultation will be open until 9 February, and we will be submitting a response supporting the government’s plan to join. Although Hague 2019 is not a complete substitute for the Lugano Convention – which the UK has to date been unable to rejoin due to the European Commission’s opposition  (see our previous blog posts here and here) – it would be helpful in expanding the ready enforceability of English judgments in the EU and elsewhere, in cases which are not covered by the 2005 Convention as there is no exclusive English jurisdiction clause.

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

2019 Hague Judgments Convention comes into force in September 2023 but (for now) only between EU and Ukraine

On 29 August 2022 the EU acceded to, and Ukraine ratified, the 2019 Hague Judgments Convention. This means the Convention will come into force on 1 September 2023 between EU member states (other than Denmark) and Ukraine. Under the terms of the Convention, it will apply to the enforcement of judgments in proceedings commenced after that date.

The UK government is considering its position on the 2019 Convention, and we think it’s likely to consult soon on possible accession. If the UK does join the Convention, it would apply also as between the UK and the EU (other than Denmark) and Ukraine, but only where the proceedings leading to a judgment are commenced after a date approximately one year after the UK’s accession, so probably not until some time in 2024 at the earliest.

The Convention would not apply between the UK and EU where the English or EU member state court took jurisdiction under an exclusive jurisdiction clause, as in that case the 2005 Hague Convention on Choice of Court Agreements would generally take precedence.

The 2019 Convention is described in more detail in this previous blog post. In essence, it complements the 2005 Convention by allowing enforcement of judgments in much broader circumstances – for example, it applies to judgments where the court took jurisdiction under a non-exclusive jurisdiction clause, including a unilateral clause, and it is wider in scope than the 2005 Convention, applying for example to employment and consumer contracts.

The European Commission takes the view that the Hague Conventions, and not the Lugano Convention 2007, are the way forward when it comes to enforcement of judgments between the EU and the UK (see our previous blog posts here and here). The 2019 Convention is certainly not a complete replacement for the Lugano Convention, not least because recognition and enforcement can be refused on broader grounds than under Lugano, and there is the timing issue, which wouldn’t arise under Lugano to the same extent, but it is arguably the next best thing.

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

Court of Appeal overturns decision striking out class action arising from 2015 collapse of Fundão Dam in Brazil

The Court of Appeal has held that claims brought in the English court by over 200,000 claimants arising out of the 2015 collapse of the Fundão Dam in Brazil can proceed, overturning the High Court’s decision which had struck out the claims as an abuse of process in light of concurrent proceedings and compensation schemes in Brazil: Municipio de Mariana v BHP Group (UK) Ltd [2022] EWCA Civ 951.

The High Court had concluded that the proceedings would be “irredeemably unmanageable”, and that allowing the claims to progress simultaneously in England and Brazil would “foist upon the English courts the largest white elephant in the history of group actions”. The Court of Appeal, however, held that unmanageability could not itself justify a finding of abuse of process, and in any event a conclusion as to unmanageability could not be reached safely at such an early stage of the proceedings, when the precise nature and scope of the issues between the parties had yet to be identified. The proper time for considering how to manage the proceedings would be at a case management conference before the assigned judge, at which point the parties would be obliged to co-operate in putting forward case management proposals.

It was also significant that the Court of Appeal disagreed with the judge’s conclusions as to the claimants’ ability to obtain full redress in Brazil against the particular defendants. In light of the particular procedures in Brazil, and the uncertainty as to which entities could properly bring proceedings, the court was satisfied that there was a real risk that full redress could not be obtained. Continue reading

High Court considers when recast Brussels Regulation continues to apply in transitional cases

The High Court has considered when the rules in the recast Brussels Regulation will continue to apply to English proceedings commenced post-Brexit: Simon v Tache [2022] EWHC 1674 (Comm).

The decision confirms that, pursuant to article 67 of the EU-UK Withdrawal Agreement, the “lis pendens” provisions in the recast Brussels Regulation continue to apply in the UK where proceedings were started in an EU member state before the end of the Brexit transition period (31 December 2020) and the English proceedings were started only after. The court rejected an argument that the English proceedings also had to be commenced before that date.

Under the lis pendens rules, where proceedings are identical, the court second seised must stay its proceedings until the first court determines whether it has jurisdiction (under article 29); where the proceedings are related, the court second seised has a discretion to stay (under article 30). Here, as the English proceedings were found to be second in time and identical to Belgian proceedings commenced in 2020, the English court was obliged to stay its proceedings until the Belgian court determined whether it had jurisdiction.

The court also held, taking the same approach as in an earlier High Court decision, that where English (or EU) proceedings were commenced before the end of 2020 and further claims or defendants are sought to be added now, post-Brexit, the rules in the recast Brussels Regulation continue to apply to determine whether the court has jurisdiction over those claims and defendants.

What remains uncertain from the decision, however, is which jurisdiction rules apply where English proceedings were commenced after 31 December 2020 and there are identical or related proceedings commenced in an EU member state before that date. In other words, whether the English court must apply the common law rules, with the lis pendens rules being considered only if the English court considers it has jurisdiction under the common law rules, or whether all the rules on jurisdiction in the recast Brussels Regulation, not only the lis pendens rules, must be applied. The court will consider this further at a consequentials hearing.

The point turns on the correct interpretation of article 67(1) of the Withdrawal Agreement, which provides as follows:

“1. In the United Kingdom, as well as in the Member States in situations involving the United Kingdom, in respect of legal proceedings instituted before the end of the transition period and in respect of proceedings or actions that are related to such legal proceedings pursuant to Articles 29, 30 and 31 of Regulation (EU) No 1215/2012 [i.e. Brussels Recast] … the following acts or provisions shall apply:

(a) the provisions regarding jurisdiction of Regulation (EU) No 1215/2012; …”

It may be seen as surprising if the jurisdiction rules in recast Brussels apply to determine not only lis pendens situations but also jurisdiction in UK proceedings commenced post-Brexit, particularly given that (under article 67(2)) the recast Brussels rules on reciprocal enforcement of judgments apply only when proceedings were started before the end of 2020. The wording of article 67 is however open to this interpretation, so we await the court’s conclusions following the consequential hearing with interest. Continue reading

English court judgment enforced in China for the first time following landmark policy announcement

A court in the People’s Republic of China (PRC) has for the first time recognised and enforced an English court judgment in Mainland China. The decision, which was formally approved by the country’s highest court, the People’s Supreme Court (PSC), granted enforcement of a High Court commercial judgment based on the principle of reciprocity: (2018) Hu 72 Xie Wai Ren No.1 (Shanghai Maritime Court, 17 March 2022).

Importantly, the court held that China’s courts have the requisite reciprocal relationship with the English courts without needing to identify a prior instance in which the English courts have enforced a Chinese judgment – as has traditionally been required.

The decision follows an important judicial statement published by the PSC earlier this year, which indicated that a Chinese court may (if it is appropriate to do so) enforce a foreign judgment on the basis of reciprocity as long as it is satisfied that the foreign court could under its laws enforce a Chinese judgment. Continue reading

Supreme Court confirms UK government’s recognition of President of Venezuela, leaving Commercial Court to determine who is authorised to give instructions on behalf of Venezuelan Central Bank

Following an ongoing dispute between two competing Boards of the Central Bank of Venezuela (BCV), both claiming to be appointed by the recognised President of Venezuela, the Supreme Court determined unanimously that: (a) Mr Guaidó is recognised by Her Majesty’s Government (HMG) as the constitutional interim President of Venezuela; and (b) Mr Maduro is not recognised by HMG as President of Venezuela for any purpose.

Central to the Supreme Court’s decision was its recognition of the “one voice” principle, namely that it is for the executive (i.e. HMG) to decide with which entities or persons it will have relations on the international stage, and statements made by the executive to this effect must be accepted by UK courts as conclusive. This approach was perhaps not surprising, in light of intervention in the appeal by the Foreign, Commonwealth & Development Office, confirming that HMG recognised Mr Guaidó. However, in holding that UK courts should make their own findings of fact and look at extrinsic evidence only in the absence of such an express statement of recognition by HMG, the Supreme Court may have limited the scope for future judicial interpretation in relation to matters of this nature and the “one voice” principle.

The matter will now be remitted to the Commercial Court to determine whether certain of Mr Guaidó’s acts, including his appointments to the Board of the BCV, are lawful. In this context, although HMG has recognised Mr Guaidó’s government, the Supreme Tribunal of Venezuela (STJ) has nullified, or at least purported to nullify, Mr Guaidó’s appointments to the BCV. Accordingly, the authority of either Board to give instructions to UK financial institutions with custody of BCV assets now rests on whether the STJ decisions should be recognised in the UK.

As the Supreme Court explained, judicial rulings by a foreign state, while manifestations of state sovereignty, do not fall within the scope of any rule of act of state under English law. They are therefore not entitled to the same level of deference which may be shown to the legislative and executive acts of a foreign state. Accordingly, the Commercial Court may be more willing to challenge the legitimacy of the STJ rulings than to challenge Mr Guaidó’s executive acts. Further, the Supreme Court noted that if the STJ’s reasoning for its rulings was because Mr Guaidó is not the President of Venezuela, such STJ decisions cannot be recognised or given effect by the UK courts, because to do so would conflict with the view of the UK executive.

For more information see this post on our Banking Litigation Notes blog.

(Herbert Smith Freehills LLP acts for the Bank of England in the proceedings brought against it by the Maduro Board of the BCV.)

 

High Court finds submission to jurisdiction no bar to staying English proceedings in favour of Thai proceedings following change in circumstances

The High Court has granted a stay of English proceedings on the basis that the Thai courts were clearly and distinctly the more appropriate forum to determine the dispute. The stay was granted even though the English proceedings had begun five years earlier, and the defendant had unsuccessfully challenged jurisdiction at that time and had subsequently submitted to the jurisdiction by serving a defence: Apollo Ventures Co Ltd v Manchanda [2021] EWHC 3210 (Comm).

The stay was granted in light of a change in circumstances – the defendant, M, was the only remaining defendant in the English action, the claims against other defendants having been struck out when the claimant failed to provide security for costs. This meant that there was no longer a risk of inconsistent judgments against different defendants in different jurisdictions if the claim against M was stayed, a key consideration when jurisdiction was challenged originally. The court also took into account the existence of similar proceedings pending in Thailand, which were commenced by the claimant and its shareholders after the English proceedings began and were much further advanced than the English proceedings.

This case demonstrates that it is possible to apply for a stay of English proceedings a considerable time after the proceedings have begun, even where the defendant has submitted to the jurisdiction. An extension of time is however required and the application should be made promptly, as the court will apply the Denton criteria (outlined here), meaning any delay will be taken into account. The stay will likely only be granted in unusual circumstances, as on the facts of this case. Continue reading

High Court finds defendant did not submit to the jurisdiction by applying for strike out at the same time as challenging jurisdiction

The High Court has rejected an argument that a defendant submitted to the jurisdiction by applying to strike out the claim against him at the same time as challenging jurisdiction: PJSC Bank “Finance and Credit” v Zhevago [2021] EWHC 2522 (Ch).

The court considered two tests set out in the authorities to determine whether a defendant has submitted to the jurisdiction: first, whether there has been wholly unequivocal conduct demonstrating an intention to have the case tried in this jurisdiction; and second, whether there has been conduct that is “only necessary or only useful” if the defendant’s objection to the jurisdiction has been waived. The court held that these are not in fact different tests: the former is just a more modern and succinct statement of the latter.

On the facts of this case, the court held that the test was not met. Applying to strike out at the same time as challenging jurisdiction, without expressly stating that the strike out application was without prejudice to the jurisdiction challenge, was “at best equivocal”. It did not amount to the wholly unequivocal conduct required for a submission to the jurisdiction. Nor was the strike out challenge “only necessary or only useful” if the jurisdiction challenge was abandoned.

In practice however, and despite this decision, it is advisable for a defendant intending to challenge jurisdiction to make sure there is no room for doubt as to whether its conduct is consistent with such a challenge. In particular, it may be wise to leave a strike out application until after the jurisdiction challenge has been determined (if the application is still necessary at that point) or – at the very least – state expressly in the application notice that the strike out application (or any similar application) is without prejudice to the jurisdiction challenge.

The decision also acts as a reminder that an individual who is a company director or other officer and has registered a UK address for service under the Companies Act 2006 can be served at that address, even if they are not in fact living in the jurisdiction at the time the proceedings are served. This is consistent with previous authority (see for example this post). Continue reading

High Court refuses to stay proceedings against English domiciled defendant in light of pending Ukrainian insolvency proceedings

The High Court has rejected a challenge to its jurisdiction brought by a defendant who was found to be domiciled in England, and who was also a party to ongoing Ukrainian insolvency proceedings: WWRT Ltd v Tyshchenko [2021] EWHC 939 (Ch).

The court found that, since the court had jurisdiction based on the defendant’s domicile under Article 4 of the Brussels Regulation (Recast) (“BRR”), it did not have power to stay its proceedings based on the principle of “modified universalism” (ie the requirement that the English courts should generally co-operate with the courts in the country of the principal liquidation), or by analogy with Article 34 of the BRR, or by applying the principle of forum non conveniens.

In dismissing the challenge, the court provided guidance on the availability of a stay of English proceedings in connection with foreign insolvency proceedings, which will be of particular interest in relation to transitional cases subject to the BRR (ie where proceedings were started before the end of the Brexit transition period at the end of 2020), and if the UK ultimately accedes to the Lugano Convention (as to which see this blog post). The decision is, however, also relevant in post-Brexit cases in which questions of jurisdiction are governed by the common law rules.

The court in this case held, unsurprisingly, that a stay under the common law grounds of modified universalism will only be available where it does not undermine express rules governing jurisdiction. In this context, due to the mandatory nature of Article 4 of the BRR, and the nature of the claims brought in England, the analysis was relatively brief – a stay would have cut across Article 4 of the BRR, and so was not available.

However, the common law rules for establishing jurisdiction are less prescriptive than the BRR, allowing a defendant to challenge jurisdiction on the basis that there is a more appropriate forum (whether or not the defendant is domiciled within the jurisdiction). Accordingly, those aspects of the judgment concerned with whether the court should exercise its discretion to grant a stay in favour of foreign proceedings  – that discretion arising from the English Court’s inherent discretion to stay proceedings and being entirely unrelated to the BRR – will be relevant in challenging jurisdiction as established by the common law rules. Continue reading

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.