When the Brexit transition period ended on 31 December 2020, several questions remained as to the nature and extent of future judicial cooperation between the United Kingdom and the European Union.
One key uncertainty was whether EU Member States would continue to recognise and enforce English court judgments when the United Kingdom was no longer a member of the European Union and therefore no longer party to various legal instruments which govern jurisdictional matters and the recognition and enforcement of judgments.
One such instrument is the 2007 Lugano Convention, which extends the EU rules on judicial cooperation to four non-EU states, namely Denmark, Norway, Iceland and Switzerland. The United Kingdom applied in April 2020 to accede to the Lugano Convention (in its own right, rather than in its former capacity as an EU Member State). However, its application requires the consent of the existing contracting parties. On 23 June 2021, the European Commission confirmed that the European Union is “not in a position to consent” to the United Kingdom’s accession.
It is unclear whether the European Union’s stance is definitive. If the United Kingdom’s application is unsuccessful, the default position is the Hague Convention, to which the United Kingdom re-acceded in its own right on 1 January 2021 (whereas previously it was a member in its capacity as an EU Member State).
The effect of the United Kingdom’s re-accession to the Hague Convention is that commercial parties that have granted the English courts exclusive jurisdiction to hear their disputes can expect their choice to be upheld by UK and EU courts, and resulting court judgments to be recognised and enforced across the European Union.
The Hague Convention is not as comprehensive as the Lugano Convention, however. For instance, non-exclusive jurisdiction clauses (permitting recourse to more than one jurisdiction) or asymmetric jurisdiction clauses (permitting one party recourse in more than one jurisdiction) are excluded under the Hague Convention. Moreover, it is unclear whether an exclusive jurisdiction clause agreed before 1 January 2021 will be treated by EU Member States as falling within the scope of the Hague Convention. Where the Hague Convention does not apply, courts will apply local law to determine questions of jurisdiction and enforcement.
In light of the Hague Convention’s narrower scope and the uncertainty as to its application in some situations, parties are increasingly likely to adopt exclusive jurisdiction clauses, or to resolve disputes by arbitration instead of before state courts (the recognition and enforcement of arbitral awards being unaffected by Brexit).