The EU-UK Trade and Cooperation Agreement has now been agreed. So what rules will apply to jurisdiction and foreign judgments in the UK from 1 January 2021?
It has been a long time in the making, but the UK and EU have finally reached an agreement (the EU-UK Trade and Cooperation Agreement) on their future relationship after the end of the Brexit transition period, which expires today, 31 December 2020.[i]
It has been known since the referendum result on 23 June 2016 that the rules applicable to jurisdiction and enforcement of judgments would change after Brexit, since the regime that currently applies — the Brussels Recast Regulation 1215/2012 (Brussels Recast) — is only available to EU Member States.
In previous posts in this series, we explained the different rules which could apply to jurisdiction and enforcement of foreign judgments in the UK from 1 January 2021, covering the Lugano Convention 2007 (here), the Hague Convention 2005 (here), and the UK’s common law rules (here), in both “deal” and “no deal” situations.
Now that we have a deal, this post provides an overview of the applicable rules.
The Lugano Convention 2007
Perhaps surprisingly, the EU-UK Trade and Cooperation Agreement does not include any provisions at all on jurisdiction and enforcement of judgments in civil cases.
It had generally been anticipated that the deal might provide for the UK’s accession to the Lugano Convention 2007 to be completed in time for the end of the Brexit transition period. The Lugano Convention 2007 is very similar to the current Brussels Recast regime, and so is the option that would best preserve the status quo. The UK applied to join the Lugano Convention 2007 on 8 April 2020, but so far the EU (which has a veto over the UK’s accession) has not approved the application. Many observers thought that the EU would provide that approval as part of, or alongside, the overall trade deal, and enable the Lugano Convention 2007 to come into force by the end of the Brexit transition period. That has not happened.
The EU may still approve the UK’s accession in due course. Latham & Watkins will provide a further update if matters develop.
The Hague Convention 2005
The Hague Convention 2005 will continue to apply from 1 January 2021. The Hague Convention 2005 requires the courts of contracting states to uphold exclusive jurisdiction clauses, and to recognise and enforce judgments given by courts in other contracting states that are designated by such clauses.
The contracting states include the UK, EU, Singapore, Mexico, and Montenegro. Other contracting states may accede in the future. For example, the US, China, and Ukraine have signed the Hague Convention 2005, but have not ratified or acceded to it, and it therefore does not yet apply in those countries.
To benefit from the Hague Convention 2005, parties need to give careful consideration as to whether their jurisdiction clause is “exclusive” for the purposes of the convention (e.g., it may not apply to asymmetric jurisdiction clauses) and the date that they agreed the clause (views differ as to whether the clause is required to have been agreed after 1 October 2015 or 1 January 2021). We explain these points in further detail in our previous posts.
The UK’s common law rules
In cases falling outside the Hague Convention 2005, the English common law rules apply. This may have advantages as well as disadvantages for prospective litigants. Under the common law rules, English court jurisdiction will in principle be available in a wider range of circumstances, but the English courts will also have the discretion to reject proceedings that have a much closer connection to another country under the doctrine of forum non conveniens. For a recent example of the English High Court applying that doctrine, see Latham’s post on the case of Município De Mariana & Ors v. BHP Group Plc & Anor[ii] here.
From 1 January 2021, the English courts will also have an array of powerful tools at their disposal that are restricted under the Brussels Recast regime — notably, the anti-suit injunction and damages for breach of jurisdiction clauses — that are likely to ensure that jurisdiction clauses in favour of English courts and tribunals are complied with.
Finally, as a reminder, Brexit does not impact the approach to determining governing law or drafting governing law clauses. The instruments that currently determine governing law, Regulation (EC) No 593/2008 on the law applicable to contractual obligations (Rome I) and Regulation (EC) No 864/2007 on the law applicable to non-contractual obligations (Rome II), have been implemented in UK domestic law and will continue to apply from 1 January 2021.[iii]
While the UK and the EU finally reached an overall trade deal, it is a “no deal” situation for jurisdiction and the enforcement of judgments. Since the UK and the EU have not reached agreement on the UK’s accession to the Lugano Convention 2007 — the option that would most closely replicate the status quo, and keep the UK aligned to the EU’s rules — parties should prepare for changes in this area starting on 1 January 2021.
Notwithstanding that, contracting parties should continue to feel confident about including English governing law and jurisdiction clauses in their agreements, which will continue to be upheld and enforced by English courts. In fact, with this new divergence in the rules between the UK and the EU, choosing English governing law, jurisdiction, and arbitration clauses may bring certain advantages.
[i] The draft EU-UK Trade and Cooperation Agreement can be found here: https://ec.europa.eu/info/files/eu-uk-trade-and-cooperation-agreement_en. The implementing UK legislation is the European Union (Future Relationship) Act 2020, found here: https://www.legislation.gov.uk/ukpga/2020/29/enacted/data.htm.
[ii]  EWHC 2930 (TCC).
[iii] Rome I and II are implemented in the Law Applicable to Contractual Obligations and Non-Contractual Obligations (Amendment etc.) (EU Exit) Regulations 2019 (SI 2019/834) — https://www.legislation.gov.uk/uksi/2019/834/contents/made.