Legal experts welcome UK consultation on Hague Judgments Convention

Emilie Jones of Pinsent Masons said: “For businesses which regularly use the courts of the UK jurisdictions to resolve international civil and commercial disputes, this will be seen as a welcome early step by the UK government towards joining the 2019 Hague Judgments Convention. Since Brexit caused the UK to drop out of the relatively streamlined cross-border judgment enforcement regimes found in the Recast Brussels Regulation and Lugano Convention, some businesses have continued to be concerned about the ease of enforcement of UK judgments in EU member states and some of the Lugano states of Norway, Iceland and Switzerland.”

“Those concerns have not been helped by the ongoing uncertainty about whether the UK will be able to re-join the Lugano Convention in its own right – which is widely seen as the UK’s best post-Brexit option on these issues – following the European Commission’s statement last year that the EU was not in a position to consent to the UK’s application to re-join Lugano,” Jones added.

The 2019 Hague Convention covers the recognition and enforcement of foreign judgments in civil and commercial matters. The multilateral private international law convention, which establishes common rules to facilitate the recognition and enforcement of foreign judgments between contracting states, was concluded on 2 July 2019. The Convention will enter into force on 1 September 2023, a year after the first two states – the EU (excluding Denmark) and Ukraine - ratified or acceded to it. The UK government is now seeking views on its plan for the UK to ratify the Convention and implement it into domestic law.

Richard Dickman of Pinsent Masons said that, despite Brexit, “businesses do generally still have routes to enforce UK judgments in EU member states and many other jurisdictions. For example, where a UK court has jurisdiction over a dispute due to an exclusive jurisdiction clause in a contract, and gives judgment in that dispute, the Hague Choice of Courts Convention 2005 will frequently enable enforcement in another jurisdiction which is party to that Convention, including EU member states. Enforcement may also be possible under the national laws of the jurisdiction in which enforcement is sought.”

He added: “But joining the 2019 Hague Judgments Convention would undoubtedly be beneficial for businesses wishing to litigate in the UK and enforce their judgments in other contracting states. Unlike the Hague Choice of Courts Convention, this convention enables enforcement even where there is no exclusive jurisdiction clause – something which will be particularly helpful in non-contractual disputes and situations where non-exclusive or asymmetric jurisdiction clauses are common, such as in financial services contracts. Given the EU’s accession to the Hague Judgments Convention, accession by the UK would go some way to plugging the enforcement gap left by Brexit.”

Dickman also added that the benefits of the Hague Judgments Convention 2019 “potentially go wider than just the EU”.

“It is a global convention, open to all, and has been signed, though not yet ratified, by a number of other jurisdictions with whom the UK does not currently have treaties to assist with the mutual enforcement of judgments, including for example the United States,” he said. “Ultimately, how beneficial the convention will be to businesses involved in international trade and disputes will depend on how many jurisdictions join it and whether it achieves the level of global popularity enjoyed by the New York Convention in respect of the cross-border enforcement of arbitral awards.”

Jones added: “It should be noted, however, that the 2019 Hague Judgments Convention is not a perfect replacement for the Recast Brussels Regulation or Lugano Convention. Unlike those instruments, it only relates to the enforcement of judgments, and does not regulate the allocation of jurisdiction between the courts of different states – leaving the risk of disputes over jurisdiction in cross-border cases higher than it was pre-Brexit. The new convention is also subject to a number of limitations in scope, criteria, exclusions and caveats.”.

She said: “It is also important to remember that the convention will not apply for some time yet: even if the UK ratifies it, it will not come into force for the UK until 12 months after the ratification. Even then, it will only apply to judgments given in proceedings commenced after that date. As a result, it remains important for businesses to give careful consideration, with the benefit of legal advice, to what dispute resolution clauses to use in their cross-border contracts, and to take early advice on any cross-border disputes which arise.”

The government consultation is open for responses until 9 February 2023.