Lugano no more: UK suffers major setback in bid to remain member of Lugano Convention

The EU Commission has now confirmed its opposition to the UK acceding to the 2007 Lugano Convention. The Lugano Convention is an important European-centric international treaty which provides for a standard set of rules relating to cross-border jurisdiction, in civil and commercial cases, and also ensures reciprocal enforcement of judgments amongst all contracting states, including the EU member states, Denmark, Norway, Switzerland and Iceland.

As a consequence of Brexit, and following the end of the transition period on 1 January 2021, the UK is no longer a contracting member of the Lugano Convention.

The Commission has now formally set out its opposition to the UK’s application to re-accede to the Convention. The Commission is of the view that the Convention is a reflection of the EU rules on jurisdiction and enforcement for the European Free Trade Association states who have also acceded to Lugano. Therefore, they conclude, whilst Lugano is open to accession by “any State”, that primarily it is only appropriate for those that have a “particularly close regulatory integration with the EU".

In short, unless you are an EU member state, a European Economic Area State or a Europe Free Trade Association State, then your accession should be blocked.

Is this game over for the UK?

Whilst this is a particularly damning development for the UK’s hopes of accession to the Convention, it is still up to the current member states to decide. The Council of the European Union has the final say and, as yet, we have no timetable for their decision. It is feared that some member states may wish to challenge London’s position as an international commercial litigation hub.

What now?

Thankfully, the Hague Convention on Choice of Court Agreements 2005 (The Hague Convention), has survived the Brexit process and was implemented into domestic law via The Private International Law (Implementation of Agreements) Act 2020. This provides for a similar effect to Lugano: under The Hague Convention, exclusive jurisdiction clauses are given effect and judgments by courts in those jurisdictions are then recognised and enforced in other states party to the Convention.

In situations where enforceability of a UK judgement in the EU is important, the Hague Convention is a valuable safeguard. However, it is important to note that there are some types of common jurisdiction agreements that are excluded from its protections and, here, litigants will need to rely on local laws.

How can we help?

If you have any queries in relation to jurisdiction rules and enforcement of judgments, please contact our Commercial Dispute Resolution team.

This article was co-written by Calum Lavery, Trainee Solicitor.

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