The recognition and enforcement of judgments in civil and commercial matters is not addressed by the Trade and Cooperation Agreement concluded on December 24, 2020 between the United Kingdom and the European Union. The departure from the previous regime, which has proven its efficiency, raises major legal issues. The loss will be felt on both sides of the Channel, though perhaps most keenly in the United Kingdom, which has now left a system to which the Member States continue to belong.
The previous regime, its advantages and (limited) continuation for the UK
UK and European judgments resulting from actions initiated on or before December 31, 2020 will continue to be subject to the Brussels Recast regulation for their enforcement, pursuant to Article 67(2)(a) of the Withdrawal Agreement of October 17, 2019.
Where the Brussels Recast regulation so applies, European and UK judgments will be enforced directly upon presentation to the enforcement authorities of the requested state of a copy of the judgment and a certificate of enforceability from the court of origin. The judgment debtor can only contest the enforcement a posteriori, and on the basis of limited grounds which concern, essentially, violation of public policy, rights of putting a defence, and the incompatibility of the judgment to be enforced with another judgment. These grounds have the additional benefit of a number of decisions from the European Court of Justice concerning their uniform interpretation and application.
The main advantage of the Brussels Recast regime is therefore that it facilitates the free circulation of judgments via predictable supranational rules, and a simplified and straightforward procedure. The Brussels Recast regulation will no longer apply in the UK, nor will it apply in the EU in respect of UK judgments in actions initiated after December 31, 2020. There is even a risk for judgments in actions initiated before that date if courts fail correctly to apply the transitional rules of the Withdrawal Agreement (as was the case recently before a Swiss court in relation to the transitional application of the 2007 Lugano Convention).
What's next ?
1. The hoped-for (but unattainable) alternative : the 2007 Lugano Convention
The 2007 Lugano Convention is the successor to the 1988 Convention: its rules are aligned with those of the Brussels I regulation (before it was recast in 2012), and it facilitates an enforcement regime between the EU and EFTA countries.
The advantages of this convention (though it may not match the "direct" route to enforcement provided by the Brussels Recast regulation) are clear : (i) the convention is applicable throughout the European Union and in Switzerland, Norway and Iceland; (ii) the judgment creditor can obtain enforcement through a non-adversarial procedure (subject to an adversarial appeal), and (iii) the grounds for refusal of enforcement are harmonised and mirror the narrow grounds available under the Brussels Recast regulation.
It is for these reasons that, on April 8, 2020, the United Kingdom applied to become a member of the convention in its own right. France and the European Commission have, however, suggested that the European Union should exercise its veto and refuse the UK application. This position, which seems aimed at strengthening the attractiveness of continental legal centres, may be difficult for the UK to overcome.
2. Other alternatives : uncertain international conventions
Other international conventions considered for the post-Brexit enforcement of UK and European judgments are the 2005 Hague Convention, the 2019 Hague Convention, and a number of multilateral or bilateral conventions between the UK and Member States that applied prior to the Brussels regime.
These conventions have the advantage of providing at least some harmonisation of the grounds for granting or refusing recognition and enforcement. On the other hand, most of them also have the disadvantage of referring to enforcement procedures available under the national procedural law of the state in which enforcement is sought. This significantly differentiates these conventions from the regime under the Brussels Recast regulation - and inevitably leads to a more cumbersome and expensive enforcement process. The question of how much so will depend on the instrument applied in each case.
With regard, first of all, to the 2005 Hague Convention, the main disadvantages lie in the reduced scope of application:
- Territorially, the convention is not applicable in Switzerland, Norway or Iceland (which, ante Brexit, applied the 2007 Lugano Convention to the enforcement of English judgments);
- Materially, it is not applicable, for example, to real estate, intellectual property or transport of goods. Above all, it requires that the judgment to be enforced be given pursuant to an "exclusive" jurisdiction clause, i.e. neither optional, nor asymmetric, nor alternative;
- Temporally, the United Kingdom and the European Commission disagree on the date on which the Convention became applicable to the UK as an independent state, potentially putting at risk English choice-of-law clauses concluded during the "transition period" - from 1 February to 31 December 2020.
With regard, secondly, to the 2019 Hague Convention, although the European Union has expressed its willingness to conclude it "in the near future", it is also inapplicable to a significant number of commercial matters. Most importantly, it has not yet entered into force and is signed (but not ratified) by only three countries - Uruguay, Ukraine and Israel.
With regard, thirdly and finally, to the resurrection of international conventions applicable prior to the Brussels regime, and in particular the 1934 France-UK Convention, opinion is divided across the two sides of the Channel. English commentators have put forward the revival of this Convention on the basis of the Foreign Judgments Act 1933, which has continued to apply (at least residually for Member State judgments) while the Brussels regime continued in force. French commentators, however, express the view that the Brussels Recast regulation has "replaced" the previously applicable conventions, including the 1934 Convention.
This solution therefore remains highly uncertain. Notably, the United Kingdom and Norway recently concluded a new agreement to revive their bilateral convention of June 12, 1961 which, perhaps, indicates that the convention did not automatically revive following the end of the European regime.
3. Default regimes : French and English private international law
Where none of the above applies, it will be necessary to rely on national rules for the enforcement of a foreign judgment - namely, in cross-channel matters, French and English private international law.
French private international law provides a particularly liberal regime for recognition and enforcement of foreign judgments. As long as the exclusive jurisdiction of the French court has not been disregarded, the dispute has a sufficiently clear link with the foreign forum, and the judgment is not obtained by fraud nor violates French international public policy, exequatur will be granted. The condition of no violation of French international public policy is however liable to raise difficulties only in the (unlikely) event of insufficient reasoning provided in the English judgment or (exceptionally for English courts) an award of punitive damages.
By contrast, the English private international law regime is comparatively more burdensome. Firstly, there is no exequatur procedure as such: the judgment creditor instead brings a fresh claim before the English courts to recover the foreign judgment as a debt from the judgment debtor. Secondly, the regime applies only to foreign judgments ordering the debtor to pay a sum of money. Finally, and among other conditions, the judgment creditor will have to show that the foreign court had jurisdiction to hear the dispute in accordance with English rules.
Other European countries may impose more stringent conditions than French law for the enforcement of an English judgment. Italian and German courts will, for example, require that the English court had jurisdiction to hear the case under their national rules of procedure. The German Code of Civil Procedure even allows the enforcement of a foreign judgment to be refused in cases where a comparable German judgment would not have been recognised as enforceable if it had been presented to the foreign court (the so-called "reciprocity condition").
In all cases, whatever the applicable national law - and unlike under the Brussels Recast regulation or the 2007 Lugano Convention - the judgment creditor will have to initiate an adversarial procedure ab initio, which will take more time and increase the costs of enforcing the foreign judgment. Above all, the application of national laws has the major disadvantage that there is no harmonisation when enforcing across different countries.
In conclusion, Brexit does not prevent recognition and enforcement of judgments between the United Kingdom and the European Union. It does however render the conditions for recognition and enforcement more uncertain or more complex. Particular attention will need to be paid to the countries in which the debtor's assets are located and, accordingly, which international conventions and/or national laws may apply. The UK's departure may, however, present an opportunity for the continued development of international arbitration with arbitral awards remaining readily enforceable in more than 150 countries.