Hopes that the UK may be able to re-join the Lugano Convention, which deals with issues of jurisdiction and enforcement of judgments across the EU/EFTA Member States, suffered a blow this week, as the European Commission recommended that the UK should not be permitted to re-join.
The Lugano Convention provides a framework for determining questions of jurisdiction and the recognition and enforcement of judgments in civil and commercial matters between the EU and three out of the four EFTA states (Norway, Iceland and Switzerland). It is similar in principle to the Recast Brussels Regulation, which applies between the EU Member States themselves, although it has not yet gone through the same updating process as the Brussels Regulation. Both the Lugano Convention and the Recast Brussels Regulation ceased to apply in the UK at the end of the Brexit Implementation Period on 31 December 2020.
The UK, however, applied to accede to the Lugano Convention in its own right in April 2020. Such accession requires the unanimous agreement of all the other contracting parties to the Convention. Iceland and Switzerland have given their formal consent to the UK's accession and Norway has also indicated its support.
But this week, the EU Commission has recommended that the EU should not give its consent to the UK's accession because it believes that the Convention supports the EU’s relationship with third countries with which it has a particularly close regulatory integration, but is not the appropriate general framework for judicial cooperation with any given third country. Given the UK's decision to leave the EU, its Single Market and Customs Union, as well as its decision to have a more distant relationship with the EU than the EFTA countries, the Commission takes the view that the EU should not give its consent to the UK's request to join the Convention.
"For the European Union, the Lugano Convention is a flanking measure of the internal market and relates to the EU-EFTA/EEA context. In relation to all other third countries the consistent policy of the European Union is to promote cooperation within the framework of the multilateral Hague Conventions. The United Kingdom is a third country without a special link to the internal market. Therefore, there is no reason for the European Union to depart from its general approach in relation to the United Kingdom. Consequently, the Hague Conventions should provide the framework for future cooperation between the European Union and the United Kingdom in the field of civil judicial cooperation."
The European Parliament must now also give its view on this issue and we understand that that the Council will make the final decision, by qualified majority voting - i.e. by a 55 per cent majority, or 15 out of the 27 Member States, representing at least 65 per cent of the EU population.
If consent to accede to the Convention is not forthcoming, the UK will continue to determine questions of jurisdiction and enforcement of judgments as it has since the beginning of this year – either under the Hague Convention on Choice of Court Agreements 2005, where there is an exclusive choice of court agreement, or under the common law, where there is not (please refer to our briefing "Dispute resolution – What Now?" for more information).
But for now, all eyes are on the European Council….
Authors: David Capps, Partner, and Lindsey Davies, Senior Expertise Lawyer
