UK/EU: Looking beyond the Lugano Convention?
Recent months have seen a notification from the European Commission to the Lugano Convention depositary regarding the UK’s attempt to re-join. Shortly thereafter, in a separate development, the Commission published a formal proposal recommending that the EU accede to the Hague Judgments Convention. We take a quick look, from the perspective of UK/EU relations in civil and commercial justice, at the potential implications.
The summer months saw some activity on the part of the European Commission in the sphere of private international law. Steps were taken which will be of particular interest to all those following post-Brexit relations between the UK and the EU; in particular the drawn out tale of the UK’s attempt to accede to the Lugano Convention 2007 (“Lugano”) and, further into the future, whether the Hague Judgments Convention 2019 (“HJC”) might provide any additional coverage. Starting with Lugano…
Lugano – stalemate for the UK’s accession?
As many will know, Lugano regulates jurisdiction and the enforcement of judgments as between the EU, Switzerland, Norway and Iceland in a similar way to intra-EU rules. The UK, in April 2020, submitted an application to join Lugano as an independent contracting state; the idea being that this could rebuild the pre-Brexit status quo on matters within Lugano’s operation.
To succeed, that application, however, requires the unanimous consent of the other parties to Lugano. In that respect they were only obliged (under Article 72(3)) to “endeavour to give their consent at the latest within one year” after being invited by the Lugano Convention depositary (the Swiss Federal Council) to do so (although that period expired in April 2021, it was only an endeavours obligation and the UK has since continued to leave its application outstanding).
Obtaining the necessary consents for this has proven to be difficult. Although Switzerland, Norway and Iceland have all formally consented, the EU (and Denmark) have held out. Furthermore, in May 2021, the Commission issued a communication to the European Parliament and the Council of the EU indicating that it was set against the EU consenting to the UK’s re-accession (on the basis that the Commission sees Lugano as an instrument for EU/EFTA/EEA relations).
Having informed those institutions of that assessment, the communication then stated that the European Parliament and the Council of the EU would be given an opportunity to express their views before the Commission would inform the depositary accordingly.
Although those institutions do not appear to have then made any views known (at least publicly), that latter step apparently was, at the beginning of summer, taken: On 28 June 2021 (albeit published by the depositary on 1 July, see here and here), the depositary received a notice from the Commission, by way of a short note verbale, that the “European Union is not in a position to give its consent to invite the United Kingdom to accede to the Lugano Convention”. Nothing further of substance was said.
So, where does this leave things? In some ways there was little in it that was not already known; in order to approve the UK’s accession the EU would likely have to follow its procedure for approving the conclusion of international instruments in Article 218 TFEU which, in line with the Commission’s negative assessment, does not appear to have been initiated. So, on one view, it is a reflection of the here and now.
However, that situation might only begin to change if political will is exerted by the other EU institutions. So what would be even more unfortunate is if the Commission’s recent notification to the depositary is a signal that there is broader consensus within them in line with the Commission’s view, or that the issue is just not a priority for them (some response to the Commission’s communication in May might, for instance, have been expected). Since, unless a contrary will is found, stalemate will persist.
Either way, to a degree, the precise ins and outs are not important. The practical message remains as it has always been: the UK’s re-accession to Lugano is not something which it has ever been possible to take for granted and “no-deal” in civil and commercial justice for the UK is, essentially, the reality. That has been the basis on which many businesses have been acting for a long time, and on which they sensibly continue to do so (for the “no-deal” lie of the land, see our earlier publication here).
The HJC – a glimmer on the horizon?
Meanwhile, on 16 July 2021, the European Commission published a separate proposal recommending that the EU accede to the HJC. This is a significant development as it provides the trigger, under Article 218 (6) TFEU, for the Council of the EU to decide whether to adopt such a decision which, if done, (and if the European Parliament approves the same), would mean that the EU would be in a position to become a full contracting party to the HJC.
The HJC, the text of which was settled in 2019, is an instrument which is not yet in force in, or as between, any states (a handful have signed it, but this only indicates an intention to accede at some point in the future).
However, its progress is being watched closely as its provisions establish a recognition and enforcement regime for court judgments amongst states who become party to it. It is a separate instrument from the Hague Choice of Court Convention 2005 (“HCCC”) and its provisions capture a wider range of situations (including where the parties have used a choice of court agreement that doesn’t fall within the very specific form that the HCCC caters for). So in that sense, although the two are complementary (states can accede to both, either or neither), its scope is somewhat more holistic than the HCCC (for more on the HJC see our summary of its workings here).
As such, although accession would have a fundamental impact on the EU’s framework for dealing with third state judgments generally, in the immediate term there has been focus on whether the HJC might be another candidate for future UK/EU civil justice co-operation; and in that respect this is at least a positive first step.
But, that is all it is; the start of a process with a number of hurdles. Even assuming the EU does approve its own accession (a process which will take a bit of time), whenever a state accedes to the HJC there is a 12 month lead in time for the establishment of relations between it and any other contracting states, within which those states can each pick and choose whether they want the HJC to apply between the acceding state and themselves (and the acceding state has a similar right). In that sense (and in contrast to the HCCC) the HJC operates more as a framework for bilateral relations. Thus, even if the UK were also to decide that it wanted to accede to the HJC (a decision which, conceivably, these developments might help catalyse), there could yet be more tension to come