Update of recognition and enforcement of UK judgments: Hague Judgments Convention signature brings clarity

On Friday, 12 January 2024, the UK signed the 2019 Hague Judgments Convention on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters (“The Convention”). Since the UK left the European Union, and its associated departure from the Brussels regime and Lugano Convention, parties wishing to have UK judgments recognised and enforced in other jurisdictions (including in EU member states) were deprived of reliance on an internationally recognised framework of rules. It is expected that by signing the Convention, parties seeking enforcement and recognition of a UK judgment will benefit from greater clarity and certainty.

When it has ratified the Convention, the UK will join the EU (excluding Denmark) and Ukraine, by becoming a contracting party to this convention. Uruguay have also become a contracting party and the Convention will enter force in Uruguay on 1 October 2024.

Other signatories include Costa Rica, Israel, Russia, United States, Montenegro & North Macedonia. However, these countries have not yet ratified the Convention.

2019 Hague Judgments Convention

The Convention is designed to provide a single global framework for the free circulation and enforcement of judgments on civil and commercial matters across jurisdictions. Its aim is to reduce transactional and litigation costs in cross-border matters and to promote international access to justice. Contracting states will be bound to recognise and enforce judgments from other contracting states, subject to certain defences relating to public policy, fraud, insufficient notice, and other matters.

Unlike the Brussels and Lugano regimes as well as the 2005 Hague Convention, the Convention is not a double convention. While it deals with the recognition and enforcement of judgments, it does not address the jurisdiction of a court to hear a dispute in the first place. This means that there is a heightened risk of parallel proceedings in different jurisdictions when compared to the 2005 Hague Convention or the Brussels and Lugano regimes, although once the issue of enforcement comes into play, the Convention offers protection.

The subject matter scope of the Convention differs from that of the Brussels and Lugano regimes. Grounds for refusal to recognise the judgment of a foreign court are also wider. These include public policy grounds, which are arguably more likely to feature in a global convention than in a regional instrument such as the Brussels regulation.

Further limitations include the option under Article 29 for a contracting party to make a notification to exclude the application of the Convention between it and another contracting party. However, Article 29 may also be seen as offering protection to businesses contracting with counterparties from countries where the prospects of a fair and/or speedy hearing are doubtful. In addition, under Article 18, a contracting party may declare that it has a strong interest in not applying the Convention to a specific matter.. For example, the EU has declared in accordance with Article 18 that it will not apply the Convention to non-residential leases (tenancies) of immovable property situated in the EU.

As addressed below, there is also a run-in time before the Convention will apply between the EU and the UK to judgments falling within its subject-matter scope.

Articles 1 and 2 of the Convention limit the scope of the recognition and enforcement of judgments to civil and commercial matters. Revenue, customs, and administrative matters are excluded. Other areas are excluded from the scope of the Convention including:

• Matters covered by more specialised treaties (for example, family, matrimonial, succession, the carriage of passengers and goods regardless of how carriage takes place, and certain maritime matters).
• Matters that are treated inconsistently, or that reflect genuine policy differences, as between legal systems such that it might not be appropriate for a judgment in one state to be given equivalent effects in another (for example, insolvency, privacy, intellectual property and certain anti-trust/competition law matters).

There is a positive obligation imposed on contracting states that a judgment given by a court of a contracting state (the state of origin) must be recognised and enforced in another contracting state (the requested state). Recognition and enforcement may only be refused on specific grounds in the Convention. Therefore, if a judgment is eligible in accordance with the convention, enforcement must be granted in accordance with provisions of the Convention. It is not open to a contracting state to decline recognition or enforcement on other grounds under national law.

Furthermore, the merits of a foreign judgment shall not be reviewed and the enforcement procedure cannot be used to re-open the substance of a dispute already adjudicated. This rule ensures certainty of judgments of the court of origin and does not allow a party to try to reverse the decision before the court where enforcement is sought.

2005 Hague Convention

The Convention will differ from but complement the 2005 Hague Convention on Choice of Court Agreements (“The 2005 Hague Convention”).

The 2005 Hague Convention is limited to judgments based on an exclusive jurisdiction clause. The 2005 Hague Convention is also more limited in its grounds for refusal of recognition and enforcement.

However, the Convention complements the 2005 Hague Convention and seeks to facilitate rule-based multilateral trade and investment, and mobility, through judicial co-operation in the recognition and enforcement of judgments.

Timing

The UK government is currently working on implementing legislation to facilitate the Convention being ratified and there are clear indications of political will to move quickly on this. Once ratified by the UK the Hague Judgements Convention will come into force 12 months later under Article 31(2) of the Convention.

Once the UK ratifies the Convention, most UK judgments will be readily enforceable between the UK and Ireland (by virtue of our continuing membership of the EU) in a similar, though not identical, fashion to pre-Brexit times. It should be noted that of the Convention is not exactly the same as the Brussels regime and the Convention is narrower in scope.

It is likely that the Convention will come into force in late 2024 or early 2025. It will then apply to cases where proceedings are commenced after the entry in force date of the Convention. It is important to note that the Convention will only apply to proceedings initiated after the Convention is ratified. Therefore, there will be considerable delay before we see the Convention being used in practice.

Conclusion

The adoption of this international framework in the UK should ease issues regarding cross-border civil and commercial litigation by allowing the judgments of the contracting states to be recognised and enforce. The next step is for the UK to prepare a statutory instrument for the Convention to be adopted. Once ratification has taken place and a clear strategy to implement this framework has been decided, the Convention will be on its way to being applicable in the UK. However, it will be sometime before it can be relied upon. Currently, EU Member States such as Ireland, will enforce judgments from non-EU Member States under the domestic rules in place.

How can we help?

The Disputes Group at McCann FitzGerald can assist clients in addressing all of the regulatory and/or litigation issues business may face in response to Brexit. Alternatively, your usual contact in McCann FitzGerald will be pleased to provide further information.