Brexit – continued recognition of civil and commercial judgments?

As part of its Brexit planning, the UK is seeking to join the 2007 Lugano Convention.

The Lugano Convention provides harmonisation on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters between EU Member States and Norway, Iceland and Switzerland. The UK has been party to the Lugano Convention as a result of its EU membership and will continue to be a party until the end of the Brexit transition period on 31 December 2020 (subject to any extension).

The Lugano Convention is similar to the 2001 Brussels Regulation that harmonises issues of jurisdiction and recognition of judgments across the EU Member States. The Lugano Convention recognises both exclusive and non-exclusive jurisdiction clauses. However, because it has not been revised since 2007, it is in a slightly less comprehensive form than Brussels Regulations as updated in 2012. As a result, it may offer somewhat less robust protection against forum shopping. This is because:

• Arbitration exclusion: Although the Lugano Convention expressly excludes arbitration from its scope, the identical exclusion in the earlier Brussels Regulation was previously the subject of some controversy in Allianz SpA v West Tankers Inc [2009] EUECJ C-185/07. There was an argument that it was not drawn widely enough and that, as a result, the Regulation could remove the ability of local courts to stay proceedings before them in favour of arbitration, and/or the ability of local courts in the seat of arbitration to use anti-suit injunctions to enforce an arbitration agreement. In the update to the Brussels Regulations in 2012, new recitals were added to clarify that courts can, but are not obliged to, stay proceedings before them in favour of arbitration.There is a growing consensus that the new recitals in the 2012 Brussels Regulation reflect the intention that always underlay the Brussels and Lugano regimes. As such, reverting to the wording in the Lugano Convention should not cause the recurrence of the West Tankers issues.

• Court first seised rule: One of the key updates to the Brussels Regulation in 2012 was the introduction of new articles to bolster the parties’ choice of jurisdiction. The new articles provide that where there is an exclusive jurisdiction agreement, any court of another Member State shall stay the proceedings until such time as the court seised on the basis of the agreement declares that it has no jurisdiction under the agreement (Article 31(2)). In addition, if the court designated under the agreement establishes that it has jurisdiction, all other Member State courts must decline jurisdiction in favour of that court (Article 31(3)).

Although the 2007 Lugano Convention does not benefit from the above updates to the Brussels Regulation in 2012 it would nevertheless provide most of the benefits of a regime that brings consistency on questions of jurisdiction and enables recognition and enforcement of judgments.

By providing its application to accede to the Lugano Convention, the UK is seeking to join the regime in its own right. The UK has received support from Norway, Iceland and Switzerland to join the Lugano Convention but consent from the EU and Denmark is also required. It remains to be seen whether or not the EU will provide its consent as the Lugano Convention is of mutual benefit because it would also enable enforcement in UK of European judgments.

Article co-authored by James Highfield.