UK Signs Hague 2019 Convention – What Are The Implications?

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On 12 January 2024, the UK government signed the Hague Convention of 2 July 2019 on the Recognition and Enforcement of Foreign Judgments...
UK Corporate/Commercial Law
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On 12 January 2024, the UK government signed the Hague Convention of 2 July 2019 on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters (Hague 2019), a framework of rules facilitating the recognition and enforcement of civil and commercial judgments between contracting states. The contracting states to Hague 2019 are currently all EU member states except Denmark, plus Ukraine and Uruguay. Hague 2019 will come into force as between those states and the UK 12 months after ratification by the UK (which has not yet occurred) – so most likely in the course of 2025. Hague 2019 will then apply to qualifying judgments given in proceedings commenced after that date.

As detailed further below, this is good news for the UK as a global centre for the resolution of corporate and commercial disputes. Hague 2019 should, in due course, ensure that most English civil court judgments are relatively easy to recognise and enforce in the EU, regardless of Brexit, and regardless of the type of jurisdiction clause the underlying dispute was governed by (or indeed whether it was governed by a jurisdiction clause at all). As more states sign and ratify Hague 2019 around the world, English court judgments should become more easily enforceable in other jurisdictions, too.

What preceded Hague 2019?

Before Brexit (and the end of the transition period on 31 December 2020), the UK was a party to EU Regulation No. 1215/2012 (the Brussels Recast Regulation1), which governs allocation of jurisdiction and recognition and enforcement of judgments as between EU member state courts. The UK was also a party to the Lugano Convention on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters of 21 December 2007 (the Lugano Convention) which governs allocation of jurisdiction and recognition and enforcement of judgments between EU member states and Iceland, Norway and Switzerland. The combined effect of the Brussels Recast Regulation and the Lugano Convention meant that there was a common framework to enforce English civil court judgments throughout the EU, and in Iceland, Norway and Switzerland – and vice versa. However, since the end of the transition period, both of those regimes have ceased to apply to and in the UK, leaving something of a gap in this regard.

After the transition period, in order to partially fill that gap, the UK rejoined in its own right the Hague Convention of 30 June 2005 on Choice of Court Agreements (Hague 2005), to which it had previously been a contracting state by virtue of its membership of the EU. All EU member states are also parties to Hague 2005, alongside a smattering of others (Mexico, Montenegro, Singapore and Ukraine). Like the Brussels Recast Regulation, Hague 2005 covers disputes with a civil or commercial subject matter, but is much more limited in scope. In very broad terms, it requires the courts of contracting states to give effect to qualifying exclusive jurisdiction clauses in favour of the courts of other contracting states, and to recognise and enforce judgments arising from disputes governed by those qualifying exclusive clauses. 

The practical effect of this has been that most English civil court judgments arising from disputes governed by exclusive English jurisdiction clauses have remained relatively quick and easy to enforce in the EU regardless of the impact of Brexit. However, English civil court judgments not captured by the Hague 2005 regime (for example because they arise from a dispute governed by a non-exclusive or asymmetric English jurisdiction clause), are now subject to the local law enforcement regime in each relevant EU jurisdiction (as indeed they have always been in non-EU jurisdictions around the world). This may have led some UK parties negotiating with EU counterparties to favour exclusive English jurisdiction clauses in their contracts, rather than opting for non-exclusive or asymmetric clauses which fall outside the Hague 2005 regime and the benefits it confers from an enforcement perspective.

What are the benefits of Hague 19?

The most important benefit of Hague 2019 is that it will, subject to certain carve outs, apply to English civil court judgments arising from disputes governed by non-exclusive or asymmetric English jurisdiction clause (or indeed not governed by a jurisdiction clause at all). This will allow UK parties to agree non-exclusive or asymmetric English jurisdiction clauses (which fall outside the scope of Hague 2005) in contracts with parties from other contracting states, in the knowledge that qualifying English court judgments arising from those clauses should as a matter of Hague 2019 be enforceable in those states – including, importantly, in all EU member states. Unlike Hague 2005, the application of Hague 2019 does not depend on when a relevant jurisdiction clause was entered into – Hague 2019 will apply if the proceedings were started after that Convention entered into force for both the state of origin and the requested state, regardless of when the jurisdiction clause was concluded.

What are the practical implications at this stage?

Some residual uncertainty remains as to when – and perhaps even whether – Hague 2019 will come into force as between the UK and EU member states. The UK still needs to ratify Hague 2019 and there will then be a twelve-month period before it comes into force between the UK and the EU, during which time it is at least theoretically open to the EU to lodge an objection to it doing so – albeit that is thought to be unlikely. UK parties should therefore adopt a watching brief for now. However, assuming no obstacles do arise in the relevant period, and as the uncertainty as to whether and when Hague 2019 will come into force recedes, it should provide greater flexibility for UK parties to select the type of English jurisdiction clause most appropriate for them in their contracts with EU counterparties (exclusive, non-exclusive, asymmetric etc.).

In the longer term, as states continue to sign up to Hague 2019, English court judgments will also become more readily recognised and enforced in other jurisdictions around the world, further bolstering the reputation of this jurisdiction as a centre of choice for the resolution of international corporate and commercial disputes.

Footnote

1. Denmark has opted out of the Recast Regulation but its provisions nonetheless apply as between it and other EU member states by virtue of the 2005 EU/Denmark Agreement.

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.

UK Signs Hague 2019 Convention – What Are The Implications?

UK Corporate/Commercial Law

Contributor

It’s not just law at Travers Smith. Our clients’ business is our business. Independent and bound only by our clients’ ambitions, we are wherever they need us to be. We focus on key areas of work where we are genuinely market leading. If it’s hard – ask Travers Smith.
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