The EU/EEA Perspective

Updated August 2020

Notes on the EU – UK negotiation and private international law

Dr Helena Raulus, Head of UK Law Societies’ Office, Brussels

Introduction

This paper provides a short overview of this year’s developments on Brexit and private international law.

The Withdrawal Agreement provisions

The EU and the UK ratified the Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community[1] (hereafter referred to as the WA) in January 2020 and it has now entered into force from 1 February 2020.

The main points relating to the judicial cooperation in civil and commercial and family law from the WA are two-fold:

1. The agreement provides for a transition period during which all relevant EU law continues to apply in the UK,[2] including all international agreements concluded by the EU;[3] and

2. it provides for the rules on cessation of the EU private international law provisions if there is no further agreement to continue cooperation beyond the transition period.[4]

These provisions make it clear that while the transition period continues, all EU law provisions continue to apply, including the Lugano Convention and the various Hague Conventions ratified by the EU on behalf of the UK. It also makes it clear that none of these provisions, internal or international, continue to apply beyond the transition period, unless otherwise agreed.

February 2020 and EU negotiation mandate

Before the EU can engage in any international negotiations, it adopts a negotiation mandate, or more formally, negotiation directives. These directives spell out two things: what topics can the EU engage with and to what extent, and who will be doing the negotiations. The EU mandate to engage with the UK on the future relationship was adopted on 25 February 2020.[5]

According to the directives, the EU has a mandate to explore options for enhanced judicial cooperation in matrimonial, parental responsibility and other matters,[6] but only in areas not covered by existing international family law instruments and taking into account the UK’s intention to accede to the 2007 Hague Maintenance Convention. This gives accordingly only a rather limited scope for any discussions on family law cooperation and as such any such action would be focused mainly on divorce, considering the wide scope of the current Hague Conventions on issues relating to maintenance and children law.

Furthermore, the negotiation directives do not mention judicial cooperation in civil and commercial matters at all. This means that the EU cannot engage in this topic in the context of the on-going future partnership negotiations, for example on giving access in the future overarching agreement to the EU instruments, such as the Brussels I, Insolvency, Taking of Evidence or Service of Documents Regulations.

The exclusion of the civil judicial cooperation from these negotiation directives does not mean though that the EU cannot engage on this topic at all. It is possible for the EU to start and conclude separate negotiations with the UK on recognition and enforcement of judgments in civil and commercial matters, such as allowing the UK to continue in the Lugano Convention or how to bridge the enforcement of the UK judgments in the EU from the EU regime to the various Hague Conventions.[7]

April 2020 and the UK request to remain in the Lugano Convention

The UK has requested to continue to participate in the Lugano Convention on jurisdiction, recognition and enforcement of judgments in civil and commercial matters.[8] This Convention sets out an almost parallel regime when compared to the Brussels I Regulation, between the EU and EFTA states.

The Lugano Convention is available for the EU and EFTA states, without any further formalities. In addition, Article 69 provides for the possibility for other states to join in if the EU (as a block,[9] and Denmark[10]) and the EFTA states[11] consent. At this date, there are no other contracting parties in the Lugano Convention beyond the EU and EFTA states.

The UK has also reportedly raised the question of divorce judgments with the EU states. One solution that has been raised is that those EU states, which are not yet parties to the 1970 Hague Convention on recognition of divorces and legal separations, could join in. This Convention has been currently ratified by 12 EU states[12] from 27.

Options for future

The biggest gap following on a no deal, or no further cooperation measures taken on enforcement of judgments, relates to the civil and commercial judgments. The 1971 Hague Convention on the recognition and enforcement of foreign judgments in civil and commercial matters has been signed only by Cyprus, the Netherlands and Portugal. [13] If there is a no deal, majority of cases will revert back to be dealt with under national law.[14]

This will mean that there are further procedural obstacles for parties to try and enforce these cases. This raises the costs of the litigation and risks on enforcement. According to anecdotal evidence available from those who are working on these cases, currently, more often than not, there is no need to raise separately enforcement proceedings as enforcement of judgments is almost automatic. For this reason, many argue, including the UK Law Societies and the Bar Councils, that there is a need for a solution here.

There are two particular solutions that could be available, although time is now running low:

The UK continues to participate in the Lugano Convention. As set out above, even if the EU negotiation mandate does not mention this, the accession to the Lugano Convention is a separate negotiation from the future partnership and therefore a separate decision needs to be made on this. The Lugano Convention is a more old-fashioned and cumbersome, when compared to the Brussels I Regulation (in particular when it comes to the lis alibi pendens), however, it has the benefit that it is a regime that is known to the lawyers as it has been in force between the EU and the EFTA since the 1990s.
The EU and the UK decide that they will both accede before the end of the year into the new 2019 Hague Convention on the recognition and enforcement of foreign judgments in civil and commercial matters.[15] This could facilitate the enforcement of judgments in wide area of topics, the main commercial areas that are excluded (when compared to the Lugano Convention) are: some aspects of competition or anti-trust and intellectual property law. It also does not provide for jurisdiction rules.

Mind the gap

The timing does matter in this case. As stated above, if there is no solution by the end of the transition period, any future cases between UK and EU parties in civil and commercial law will revert to national law. Article 67 WA clarifies that cases that are on-going, can be completed using the EU processes. What are described as on-going are where the legal proceedings are instituted before the end of the transition period.

This does allow for some cases a smooth transitioning of the into the new system – whether it is Lugano, the Hague 2019 Judgments Convention, or national law. National law of course means that in the new cases there will be more procedural obstacles and complexities for the parties, whereas the Lugano Convention or the Hague 2019 Judgments Convention will allow continued agreement on enforcement of judgments where these are applicable.

However, difficulties will arise where there is a choice of court agreement that is dated before the end of the transition period but there is no on-going case. The UK has declared that it will re-join the 2005 Hague Choice of Court Agreement on its own right. This is of course good news for the new choice of courts agreements, agreed after the date of the entry into the Convention between the UK and the EU, but the question remains what happens to choice of court agreements agreed before that date? The 2005 Hague Convention applies only to choice of court agreements concluded after its entry into force.

The UK is currently saying[16] that it will consider the exclusive choice of court agreements concluded during the period it has been a party to the Hague Choice of Court Agreements’ Convention through its EU membership (i.e. since 2015) as continuing to be valid. It is to be noted that the UK is saying that this provision only extends to the agreements agreed after 2015 and which would be considered to fall under the Hague rules, i.e. exclusive (not hybrid) choice of court agreements.

The UK is not saying that this extends also the choice of court agreements agreed before 2015, when the agreement was not in force in the EU. Therefore, it is advisable that any choice of court agreements agreed before 2015 should be re-issued, to ensure that the Hague Convention can be used to secure the enforcement of a judgment.

Whereas the answer from the EU side is further restricted: the Commission is advising that the EU side would be recognising only the choice of court agreements entered into after the UK’s independent entry into the Convention.[17] Naturally, in the EU side this decision may ultimately fall on the CJEU to make but the Commission instructions are clear and as such may create further barriers in enforcement of judgments in the EU side.

This highlights the importance of further orderly transition from one system to another. In particular, where there is a deal in this area, whether in the form of Lugano Convention or the Hague 2005 and 2019 Conventions, it would be preferable to draft transition clauses also for where there are choice of court agreements. To not do this, opens up doubt, varying practice and therefore can be used as a litigation tactic to avoid those agreements.

Unfortunately, in an environment where there is no agreement between the parties to continue the recognition and enforcement, it is difficult to see an agreement on continuance of the choice of court. This means that all agreements would need to be re-signed after the UK’s exit from the system, to ensure that they fall under the Hague Convention. This may, in turn, open up some further litigation opportunism in these areas.

Mind this gap.

[1] Official Journal of the European Union, 2019/C384I/p.01 ff.

[2] Article 127 WA

[3] Article 129 WA

[4] Article 67 WA

[5] Council Decision authorising the opening of the negotiations with the United Kingdom of Great Britain and Northern Ireland for a new partnership agreement, Brussels, 25 February 2020, 5370/20 ADD 1 REV 3, available from: https://www.consilium.europa.eu/media/42736/st05870-ad01re03-en20.pdf. The Council press release is available from: https://www.consilium.europa.eu/en/press/press-releases/2020/02/25/eu-uk-relations-council-gives-go-ahead-for-talks-to-start-and-adopts-negotiating-directives/

[6] Mobility section, paragraph 59 of the directives.

[7] More on these options below.

[8] The Convention was originally signed in 1988. It has been subsequently revised and the most recent consolidated version is available here: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex:02009A0610(01)-20160411.

[9] Opinion 1/03 from the Court of Justice. This provides that the EU has an exclusive competence in the area and needs to sign and ratify any agreements in this field by its own rules.

[10] Denmark has an opt-out from the EU measures, therefore it needs to sign and ratify the Conventions separately, on the ratification of the Lugano Convention, see for example: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=LEGISSUM%3Al16029.

[11] The EFTA states that have ratified the Convention are: Switzerland, Norway and Iceland. Liechtenstein has never ratified the Lugano Convention.

[12] Cyprus, Czech Republic, Denmark, Estonia, Finland, Italy, Luxembourg, the Netherlands, Poland, Slovakia and Sweden, https://www.hcch.net/en/instruments/conventions/status-table/?cid=80.

[13] https://www.hcch.net/en/instruments/conventions/status-table/?cid=78

[14] There are some bilateral agreements between the UK and EU states which predate the EU Regulations. However, the pertinent question is here whether these agreements are still in force. Some agreements have been retained, for good reasons. For example, the 1967 agreement between the UK and the Netherlands continues to be valid as it is still applied between the UK and those parts of the Netherlands Kingdom, which do not belong to the EU, see for example https://iclg.com/practice-areas/enforcement-of-foreign-judgments-laws-and-regulations/netherlands. However, in many cases, the Brussels I Regulation has superseded these bilateral Conventions and as the EU has now exclusive competence in the area, it is not certain whether they can simply be revived.

[15] https://www.hcch.net/en/instruments/conventions/full-text/?cid=137.

[16] The UK government has changed its mind on this matter since 2019.

[17] European Commission communication, Getting ready for changes, Communication on readiness at the end of the transition period between the European Union and the United Kingdom, 9 July 2020, COM(2020)324final, available from: https://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1594383487124&uri=COM%3A2020%3A324%3AFIN, Part F.2. contractual choice of jurisdiction.