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The UK Government has this month signed up to the Hague Convention of 2 July 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (“Hague 2019”).This blog post looks at the likely impact of Hague 2019 for parties in the English courts and what that means for the future of London as a dispute resolution centre.
Background
As a result of the UK’s departure from the EU, the Brussels I Recast Regulation 1215/2012 and Lugano Convention 2007, which set out clear rules for (i) the recognition and enforcement of judgements and (ii) determining the appropriate jurisdiction for a dispute, ceased to apply. Enforcement of English court judgments in other jurisdictions has been less straightforward in the post-Brexit landscape and while many judgments of the English courts have remained enforceable in EU member states, considerable uncertainty has remained.
Hague 2019 framework
Hague 2019 aims to provide a global framework of common rules to facilitate the recognition and enforcement of judgments from one jurisdiction to another. The Convention aims to provide a uniform approach to recognising and enforcing judgments, in order to minimise litigation costs and risks associated with cross-border dealings and the potential conflicts of domestic laws between jurisdictions when disputes arise.
States that have ratified Hague 2019 have a positive obligation to recognise and enforce judgments from other convention states, according to a common set of rules. Recognition or enforcement may only be refused in the limited set of circumstances set out in Article 7 of the Convention, which include fraud and a public policy exception, for example. Hague 2019 has already been signed and ratified by the EU (with the exception of Denmark), Ukraine and Uruguay. A number of non-EU countries, including the United States and Russia, have signed the Convention but are yet to ratify.
A wide range of judgments are covered by Hague 2019, which applies to the recognition and enforcement of judgments in civil or commercial matters, including consumer and individual employment contracts. However, the Convention does not cover certain types of judgments, including certain maritime matters, family law, insolvency, defamation, privacy or intellectual property. Competition judgments are outside the scope of the Convention, except where the judgment is based on an anti-competitive agreement or concerted practice where both the relevant conduct and its effect occurred in the state where the judgment originated.
Entry into force
Having announced the UK’s intention to join Hague 2019 on 23 November 2023, the UK Government then swiftly signed the Convention, on 12 January 2024. The necessary legislation and court rules will shortly be drafted by the UK Government, so that the Hague Convention can operate within the UK’s legal framework. Under Article 28, Hague 2019 will enter into force for the UK 12 months after ratification, which means entry into force is likely to occur by the middle of 2025. The Convention will apply to English court judgments handed down in proceedings after the Hague Convention has been ratified.
Impact of Hague 2019
Since the UK’s withdrawal from the EU, enforcement of many judgments has continued to be possible in EU member states, under the 2005 Hague Convention on Choice of Court Agreements. However, contracting parties have nonetheless been left in a state of some uncertainty, as the 2005 Hague Convention did not apply to non-exclusive or asymmetric jurisdiction clauses and also excluded a number of types of litigation, including employment and consumer cases.
By contrast, under Hague 2019 English judgments can be enforced even where the contract in question did not contain an exclusive jurisdiction clause, including situations where one party has a choice of bringing an action in a range of courts. Unilateral or one-way disputes clauses are often used in finance transactions, where it is common for a lender to require that the borrower agrees a clause allowing the lender to choose between a range of jurisdictions when bringing an action. In addition, while there are exclusions, Hague 2019 applies to a wider range of proceedings, including employment disputes and consumer matters.
Comment
The UK joining Hague 2019 is clearly a welcome step, which further strengthens the international appeal of London as a dispute resolution centre. While many English court judgments have been enforced in EU member states in recent years, the enforcement landscape after the UK’s departure from the EU was nonetheless characterised by some remaining complexity and uncertainty. The advent of Hague 2019 ensures that a broader range of parties in the English courts will benefit from recognition and enforcement of judgments, even where there is a non-exclusive or asymmetric jurisdiction clause.
Once in force, Hague 2019 will greatly benefit both businesses and consumers litigating in the English courts and provide legal certainty for parties engaging in cross-border transactions, promoting international trade and investment. Increased certainty in relation to enforcement is in turn likely to further increase the attractiveness of London to parties across the world. London has long been a forum of choice as a result of the quality of the courts, legal expertise and the flexibility and predictability of the common law and London’s reputation as a disputes hub will be further enhanced by this important development in relation to enforcement.
With special thanks to Julia Vincent for their invaluable assistance in drafting this article.
Author: Rebecca Warder