UK judgments and arbitration awards: the question of enforcement post Brexit
The question of enforcement of UK judgments in other EU countries (and vice versa) is still in flux, since the transition period for the United Kingdom’s withdrawal from the EU ended on 31 December 2020.
However, it appears that the answer lies in the – bilateral or multilateral – treaties that the UK has and will sign after Brexit. In the Withdrawal Agreement, the UK and the EU agreed that Union law is defined as ‘including international agreements concluded by the EU’ (Articles 129 and 2(a)(iv) of the Withdrawal Agreement).
As a general point to take away from this note, we recommend that club claims handlers should keep an eye on the status of the UK’s accession to the Lugano Convention (still pending) and any industry-specific inter-state agreement focusing on the shipping sector.
Turning to the details:
1. London arbitration
London arbitration is largely unaffected by Brexit, including the enforcement of arbitral awards.
The UK remains a signatory to the New York Convention 1958.
As a result, businesses which resolve their disputes through arbitration do not have similar cause for concern. Read more here.
2. Jurisdiction and enforcement
The recent trade agreement between the UK and EU is silent on matters of jurisdiction and enforcement.
The EU Recast Regulation 1215/2012 is not applicable since 31.12.2020.
Currently, the applicable law emanates from the Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters  (the ‘Hague Convention’, see below) and the default common law rules.
2.1 The Lugano Convention
The Lugano Convention 2007 governs the recognition and enforcement of judgments between EU and certain EFTA member states (incl. Norway, Iceland and Switzerland). The UK has applied to join the Lugano Convention 2007. According to Art. 72 of the Convention, the UK accession requires the unanimous consent of all contracting parties. While Switzerland, Norway and Iceland have already announced their support, the European Union and Denmark (which is an individual member due to its special status in EU civil justice cooperation) still have to give their explicit consent. Interestingly, the EU Commission has expressed reticence towards giving its approval for the UK to join Lugano after Brexit, citing level playing field concerns. The accession process may take up to one year, and its result is yet uncertain.
If the UK accedes to the Lugano Convention, there will be almost no change between the pre and post- Brexit regimes in relation to jurisdiction and enforcement, and English judgments would be readily enforceable throughout the EU and in EFTA countries. There would be no need to rely on the Hague Convention below (which would continue to apply as between the UK and Mexico, Montenegro and Singapore) or on local laws regarding enforcement of foreign judgments in the relevant countries.
2.2 The Hague Convention
Where the Hague Convention applies, English judgments will be readily enforceable around the EU (and in the other Hague contracting states, currently Mexico, Montenegro and Singapore). However, the Hague Convention only applies where there is an exclusive jurisdiction clause which was entered into after the Convention came into force for the chosen state. In this respect, the Hague Convention is narrower than the Lugano Convention and leaves a possible lacuna.
The UK argues and has legislated for the fact that the Hague Convention applies to international contracts signed after 1 October 2015, when the convention came into force across the EU. The EU Commission disagrees, arguing that it applies between the UK and EU only to contracts signed after 1 January 2021. This difference of view has yet to be tested in court.
2.3 Commonwealth and British territories
The UK has a statutory regime which governs the recognition and enforcement of judgments in place with most Commonwealth countries found in the Administration of Justice Act 1920. A useful and recent guide on enforcement post-Brexit can be found here.
3. EU Maritime Law post-Brexit
The UK will be able to act more independently regarding its strategy at the IMO, since it won’t be bound by the EU’s position.
In terms of environmental legislation, there won’t be many changes, since most of the EU regulation has been incorporated already in the UK domestic law.
Regarding air emissions, international shipping coming to/leaving from EU ports will be subject to ETS as of 1 Jan 2022. The UK is considering to link any UK ETS and the EU ETS (like Switzerland).
Autonomous vessels: the EU Parliament approved a new draft legislation on civil liability of operators of AI. Possible clash with maritime conventions on civil liability.
In conclusion, the Hague Convention will take on an increasingly important role over time, and pending any agreement on the Lugano Convention. In the meantime, assuming the UK does not re-accede to the Lugano Convention:
The English courts will no longer be restricted from applying national rules of jurisdiction to EU- domiciled defendants, eg based on temporary presence within England and Wales. This will, however, be subject to the court’s discretion to refuse jurisdiction on the basis that England is not the convenient forum for the dispute. Similarly, English-domiciled defendants will be subject to national rules of jurisdiction in the various EU member states.
The English courts should again be able to issue anti-suit injunctions in respect of proceedings in EU member state courts in appropriate circumstances, such as where an action has been brought in breach of an exclusive English jurisdiction clause. However, this issue is complex and beyond the scope of the present short note.
The English court’s permission to serve proceedings out of the jurisdiction will be required in more cases. However, it will still be possible to serve out without permission if there is an exclusive English jurisdiction clause which falls within the Hague Convention (see above).
Source: The Standard Club