Introduction
It has been recently announced, following a consultation process, that the UK will sign up to the Hague convention 20191 as soon as possible. This will not only remove some uncertainties as to the enforceability of English court judgments2 but will also provide for the recognition and enforcement of English court judgments. It further removes the necessity to rely on the vagaries of individual jurisdiction rules and bi-lateral treaties. As a matter of Cyprus law a final judgment of the English courts would be recognised and enforced under the provisions of Foreign Judgments (Reciprocal Enforcement) Law, cap 10 ("Cap 10"). In order to be enforced a final judgment of an English court would need to be registered at the relevant district court in Cyprus.
The provisions of Cap 10 prescribe a period of six weeks from the date of issue of the final judgment within which to make an application to register3. Cap 10 sets forth the grounds on which an application may be refused – (a) the judgment has been satisfied or (b) the judgment may not be capable of enforcement by execution in the jurisdiction of issue4. In addition, a registration may be set aside if5:
- the original court lacked jurisdiction; or
- the defendant in the proceedings did not receive notice of the proceedings in sufficient time to enable him to defend the proceedings and did not appear; or
- the judgment was obtained by fraud; or
- enforcement of the judgment would be contrary to public policy; or
- the person who registered the judgment has no rights in respect of the matter.
This has been the situation regarding enforcement of all judgments since BREXIT and the expiry of the transition period on 31 December, 2020 and will remain so until the UK signs the Hague Convention 2019.
Lugano Convention
In advance of the end of the transition period the UK applied in April 2020 to accede to the Lugano convention6, however the EU commission has adopted (and continues to adopt) the position that the EU is not at a position "to give its consent to invite the UK to accede to the Lugano Convention". The EU Commission is of the opinion that the Hague Conventions of 2005 and 2019 should provide the basis for recognition and enforcement of judgments between the UK and the EU.
The accession to the Lugano Convention, to which the UK was a party due to the membership of the EU would have been ideal following the Brussels recast regulation7 ceasing to apply as the scope of coverage and application are very similar8. However, as mentioned earlier, the EU is resisting the accession of the UK.
Hague Convention 2005/Hague Convention 2019
The Hague convention 2005 was signed on 30 June, 2005 and entered into force on 1st October, 2015. For the purpose of this note, the contracting parties include EU, Denmark and UK.9
The scope of the application of the Hague Convention 2005 is limited to exclusive jurisdiction clauses. It does not apply to non-exclusive or asymmetric jurisdiction clause. An asymmetric jurisdiction clause, which is common in most finance documents (in particular those of an international nature), is a jurisdiction clause where one party is restricted to bringing proceedings before one court, but the other party is not.
There are a number of exclusions from the scope of application of the Hague Convention 2005, which include employment arrangements, carriage of passengers and goods, insolvency and anti-trust. Furthermore, the convention does not apply to interim measures.
The convention defines "exclusive choice of court agreement" as an agreement that designates the courts of one Contracting State to the exclusion of the jurisdiction of any other courts for the determination of disputes10. Where the courts of one Contracting State are chosen, then those courts cannot decline jurisdiction unless the agreement is held to be null and void11. If legal proceedings are commenced in any court not designated in the agreement, then such court is obliged to suspend or dismiss those proceedings subject to some exceptions including the chosen court has decided not to hear the case12.
Any judgment issued by a designated court under an exclusive jurisdiction clause shall be recognised and enforced in the courts of other Contracting State without any review of the merits of the judgment given. The judgment will be recognised and enforced provided it is recognised and enforced in the State of origin.13
The Convention also sets out grounds for refusal of recognition14 which are similar to those under Cap.10 where registration is refused and include fraud and recognition or enforcement would be manifestly incompatible with public policy of the Contracting State where recognition or enforcement is sought.
Given, as mentioned above, the limited application of the Convention to exclusive jurisdiction clauses, questions have arisen as to whether an asymmetric jurisdiction clause falls within the Convention.
Asymmetric jurisdiction clause have been considered by the English Courts with respect to the Brussels Recast Regulation15 and the Convention. In Commerzbank AG v. Liquimar Tankers Management16 the court concluded that there are strong arguments to conclude that the Convention also applies to asymmetric clauses. This view was rejected by the English Court of Appeal,17 which concluded that the Convention only has application to exclusive jurisdiction clauses18.
As mentioned above, the EU Commission expressed the view that the Hague Convention 2005 and Hague Convention 2019 applied together should satisfactorily deal with the issue of enforcement of English court judgments in EU Member States.
Hague Convention 2019
The Hague Convention 2019 was signed on 2 July 2019 and entered into force on 1st September 2023. The member states are EU, Ukraine and Uruguay 19
In the immediate aftermath of Brussels Recast ceasing to apply with respect to UK judgments, parties, particularly in finance transactions, had to look to the alternatives such as simple exclusive clauses without any asymmetric elements20 or arbitration21 in order to ensure enforceability of judgments or awards. Now, however, with the forthcoming adoption of Hague Convention 2019, this unsatisfactory position shall likely, to a large extent, be removed.
The 2019 Convention is much wider in scope and application than the 2005 Convention and the term "Judgement" is defined widely and includes "any decision on the merit given by a court... including a decree or order and a determination of costs and expenses"22. An interim measure is included within the definition of Judgement.
As with the 2005 Convention, certain matters are excluded from the scope, such as insolvency, carriage of goods and passengers, intellectual property, anti -trust, arbitration proceedings and sovereign debt restructuring. However, unlike the 2005 Convention, the 2019 Convention covers certain non- commercial matters such as consumer contracts, employment, rights in rem and immovable property leases.
Under the 2005 Convention the risk of parallel proceedings in two or more states is avoided as any court other than the chosen court must decline jurisdiction. These protections are not included in the 2019 Convention, and these is a risk of parallel proceedings.
The 2019 Convention contains provisions similar to 2005 Convention defining the circumstances when a judgement may not be recognised and enforced and so they will not be further considered23.
Conclusion
The co-existence of the 2005 and 2019 Conventions will, once the latter is ratified by the UK, go some way towards removing many of the uncertainties surrounding enforcement of English court judgments in the EU and EU judgments in the UK, however there are still weaknesses which could be addressed by the UK acceding to the Lugano Convention.
Footnotes
1. Convention on the Recognition and Enforcement of Foreign Judgment in Civil and Commercial matters, 2 July 2019
2. For e.g. as to the applicability of the Hague Convention on Choice of Court Agreements 2005.
3. See section 4 of Cap 10
4. See section 4 (1) of Cap 10
5. See section 6 (1) of Cap 10
6. Convention on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters, 2007
7. Regulations (EU) No 1215/2012
8. Lugano convention covers all Member States of the EU plus Iceland, Norway and Switzerland.
9. Also, Singapore and Ukraine have ratified it and Israel and USA have signed it but not yet ratified it.
10. See article 3
11. See article 5
12. See article 6
13. See article 8
14. See article 9
15. See in 7 above
16. [2017] EWH (161 ( COM)
17. [2020] EWCA civ 1707-allhough the judge at first instance supported portion taken in the commerce bank case.
18. This conclusion and however the case turned on the provisions of the Brussels Recast Regulation.
19. Costa Rica, Israel, Montenegro, North Makedonia, Russia & USA have signed it but not yet ratified it.
20. See for e.g. option proposed by LMA.
21. Arbitration awards are readily enforceable under the New York Convention 1958
22. See the article 3 of 2019 Convention
23. See article 7 of 2019 Convention.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
