Two years on from the completion of the UK's exit from the EU, the effect of Brexit on cross-border litigation between the UK and the EU continues to be felt. Since our previous update on the impact of the UK's departure (available here), there have though been some interesting developments in relation to the international conventions that may apply where the relevant EU framework no longer does, in particular those of the Hague Conference on Private International Law. These appear to offer at least a partial solution to facilitating some aspects of judicial co-operation in the post-Brexit era.
What is the gap?
Subject to the ongoing application of various transitional provisions, as of 1 January 2021, the Brussels Regime1 and the Lugano Convention2 (which both concern jurisdiction, as well as the recognition and enforcement of judgments), together with the EU regulations on service3 and the taking of evidence4, no longer apply to the UK.
This change marked the end of the implementation (also known as the "transition") period, with an impact on cross-border disputes at all stages of proceedings from determining jurisdiction to the recognition and enforcement of subsequent judgments.
As well as the EU rules falling away, the UK is also obviously no longer subject to any new EU legislative developments. For example, the EU Service Regulation was recast with effect from 1 July 2022 by way of Regulation (EU) 2020/1784, with the aim of improving the efficiency and speed of transmitting and serving judicial and extra-judicial documents in cross-border civil and commercial cases. Those benefits will not apply to the service of EU proceedings on a UK domiciled defendant. The EU Taking of Evidence Regulation was similarly recast (by Regulation (EU) 2020/1783, which also came into full effect on 1 July 2022), to simplify and streamline the procedures for taking evidence in civil and commercial cases, the benefits of which will not apply in the UK.
Without the benefit (and indeed constraints) of the EU framework, or a suitable alternative international convention, parties to cross-border litigation between the EU and the UK must instead rely on domestic rules of private international law with a consequential increase in complexity, uncertainty, delay and associated costs. This is illustrated by the recent decision of the Commercial Court of England and Wales in Ebury Partners Belgium SA v Technical Touch BV, where an application for an anti-suit injunction was granted restraining the pursuit of proceedings in Belgium brought in breach of an exclusive jurisdiction agreement. Prior to Brexit, even the prospect of an anti-suit injunction would not have arisen as it would not have been possible for such relief to be granted in respect of proceedings in the court of an EU member state as this was considered by the CJEU to be an interference with the jurisdiction of the other EU court, and contrary to the Brussels regime.
What conventions could fill the gap?
The UK has sought to re-join the Lugano Convention, which applies between the EU Member States and relevant EFTA states (namely Iceland, Norway and Switzerland). However, the European Commission confirmed (on 7 July 2021) that "the European Union is not in a position to give its consent to invite the United Kingdom to accede to the Lugano Convention". The Lugano Convention is therefore not available to assist parties engaging in cross-border litigation between the EU and the UK.
The various Hague conventions that are of interest to issues of judicial co-operation offer some form of assistance, albeit they do not offer a directly equivalent framework and the UK and Ireland have not yet acceded to all of them. The Hague conventions of interest in this area are:
1.Hague Convention on Choice of Court Agreements
Where applicable, the Hague Convention on Choice of Court Agreements addresses matters of jurisdiction, as well as recognition and enforcement. Having previously been a contracting party to the convention by virtue of its membership to the EU, the UK has (as of 1 January 2021) now acceded as a contracting party in its own right.
There remains debate as to whether the UK's membership is continuous: the UK's position is that it applies to it from 1 October 2015 (when the EU acceded to it) without interruption, while the EU5 has taken the stance that it only applies to agreements concluded after it entered force for the UK as a party in its own right. It remains to be seen what approach the individual EU Member State courts (and indeed the courts of the other contracting states to this convention) will take.
There are further limitations of the Hague Convention on Choice of Court Agreements including that it only applies where:
- There is a choice of court agreement between the parties that specifies that one or more courts of a contracting state to the convention have exclusive jurisdiction;
- The proceedings concern matters within the scope of the convention;6
- From a recognition and enforcement perspective, the judgment in question is a decision on the merits (enforcement of interim rulings is outside the scope of the convention).7
This convention does facilitate cross-border judicial co-operation and goes some way to bridge the gap between the application of the EU framework and the common law rules that would otherwise apply (and the unavoidable difficulties they involve by comparison).
2. Hague Judgments Convention
In future, it is possible that the gap could be further reduced (although not eliminated) by the Hague Judgments Convention. This convention seeks to facilitate recognition and enforcement of foreign judgments within a broader scope than the Hague Convention on Choice of Court Agreements.
At the end of August 2022, the EU8 and Ukraine acceded to the Hague Judgments Convention. This means the convention will come into force, as between the EU and Ukraine, on 1 September 2023.
Various other counties have signed the convention but have not formally acceded (namely Costa Rica, Israel, Russia, the United States and Uruguay). Although the UK has not yet taken any formal steps in relation to the convention, on 15 December 2022, the UK Government opened a consultation seeking views on its plans for the UK to become a contracting party. While this would appear to signal that the UK Government is in favour of accession, it will be some time before the convention could apply to the UK. Given responses to the consultation are not expected to be published until spring 2023, and as 12 months must then expire before the convention can apply, it is likely to be 2024 at the earliest before the convention could be in force for the UK.
Although there is a further Hague convention in the planning that will focus on the question of jurisdiction9, that convention is still only in its infancy, with a working group currently at the stage of considering draft provisions. That may in due course prove to be a useful tool but for now that remains some way off.
3. Hague Service Convention
The Hague Service Convention, which provides a framework for the service of documents between contracting states to the convention, provides a broadly similar process to the use of Transmitting Agencies under the EU Service Regulation10. The Hague Service Convention makes provision for the use of Central Authority involvement in the process of service thereby avoiding the need to appoint private agents to achieve the same.
The UK has been a contracting party to this convention in its own right since 1967. All 27 of the remaining EU Member States are also signatories to this convention.
4. Hague Evidence Convention
Conversely, the Hague Evidence Convention, which concerns the taking of evidence abroad, applies to the UK as a contracting party but not to Ireland (nor Belgium, nor Austria) as they have not ratified this convention.
As a result of the ongoing application of the transitional provisions in Article 68(b) of the Withdrawal Agreement between the EU and the UK (the "Withdrawal Agreement"), the EU's Taking of Evidence Regulation will continue to apply to the UK in respect of evidence requests received by the requested court prior to 31 December 2020. However, in relation to all subsequent requests, the regulation will no longer be of relevance. For those requests as between the UK and Ireland, domestic law will therefore apply, requiring a formal request in the form of "letters rogatory" to be sent to the respective national courts via diplomatic channels, rather than being able to take advantage of the certainty of the straightforward process set out in either of the EU Taking of Evidence Regulation or the Hague Evidence Convention.
How much of a gap remains?
As a result of both gaps in terms of their contracting parties and gaps in their coverage, the Hague conventions, while having a key role to play in facilitating judicial co-operation, are not a complete substitute for the EU framework.
The Brussels Regime will, however, continue to apply to the UK where the jurisdictional issue to be determined falls within Article 67(1) of the Withdrawal Agreement, namely where:
- The relevant legal proceedings were instituted before the end of the transition period; or
- Proceedings are related to such legal proceedings
In relation to the latter, the Commercial Court of England and Wales has, in its decision in Simon v Tache & Ors, construed Article 67 of the Withdrawal Agreement as meaning that the lis pendens provisions of the Brussels Recast Regulation (specifically Articles 29 and 30 concerning the same and related actions pending before EU Member State courts respectively) applied to English proceedings commenced after the transition period where proceedings in an EU Member State were commenced before the end of the transition period. While the point has been agreed between the parties in other proceedings e.g., On the Beach Ltd v Ryanair UK Ltd, that is the first judicial authority on the issue. No doubt there will be further UK decisions providing guidance on the nuances of how Article 67 will play out in practice.
Similarly, Article 67(2) of the Withdrawal Agreement, provides that the Brussels Regime will continue to apply to the UK in respect of the recognition and enforcement of judgments given in proceedings instituted before 1 January 2021.
The run off period may, therefore, continue for some time yet as judgments arising out of proceedings that were commenced before 1 January 2021 could feasibly still be handed down for some years to come, particularly in complex cross-border cases. The recognition and enforcement of such decisions (whether by the UK courts of decisions of the EU Member State courts or vice versa) will continue to be pursued under that framework.
In other situations involving UK parties and/or UK proceedings, save where the Hague Convention on Choice of Court Agreements applies, parties have no alternative but to rely on domestic rules of private international law with all of the attendant difficulties, delays, complexities and increased costs they present.
Although not an identical offering to the Brussels Regime and the Lugano Convention, the Hague conventions do provide a means of continuing enhanced juridical co-operation with the UK, with the extent to which that can be achieved varying across the suite of those conventions. This remains an area that is continuing to evolve as, not only do the transitional arrangements between the EU and the UK still apply in certain circumstances, there is also further change ahead with new Hague conventions addressing issues of recognition and enforcement, as well as jurisdiction, on the horizon. With the recent accession/ratification by the EU and the Ukraine to the new (and as yet not in force) Hague Judgments Convention in particular, the potential for the Hague conventions to assist is increasing and constantly developing. They are, however, still some way from constituting a complete replacement for the EU framework.
If you would like to know more about this topic, please contact Julie Murphy-O'Connor or your usual Matheson contact.
1To include, as relevant, the Brussels Regulation (Regulation (EC) No 44/2001) (for proceedings commenced before 10 January 2015) and the Brussels Recast Regulation (Regulation (EU) No 1215/2012) (for proceedings commenced on or after 10 January 2015).
2Lugano Convention on jurisdiction and the enforcement of judgments in civil and commercial matters 2007 (the "Lugano Convention").
3Regulation (EC) 1393/2007 of the European Parliament and of the Council on the service in the Member States of judicial and extrajudicial documents in civil or commercial matters (Regulation (EC) 1393/2007) (the "EU Service Regulation").
4Regulation (EC) No 1206/2001 on cooperation between the courts of the EU countries in the taking of evidence in civil or commercial matters (Regulation (EC) 1206/2001) (the "EU Taking of Evidence Regulation").
5The view of the European Commission was set out in a notice to stakeholders titled: ‘Withdrawal of the United Kingdom and EU rules in the field of Civil Justice and Private International Law’ dated 27 August 2020
6Certain matters are expressly excluded from the convention (Article 2 sets out these exclusions)
7The Convention also applies to judicial settlements where they have been concluded or approved by a court specified in an exclusive jurisdiction agreement and are enforceable in the same manner as a judgment in their state of origin.
8The EU's accession binds all EU Member States apart from Denmark.
9For information on the so-called "Jurisdiction project" of the HCCH see: here.
10Regulation (EC) 1393/2007