Proceedings against defendants in EU member states – the case for starting court claims before the end of 2020



As we approach the end of the Brexit transition period on 31 December 2020, uncertainty remains as to what replacement regime (if any) will be available for cross-border recognition and enforcement of judgments. The enforcement process may well depend on whether proceedings are commenced before or after the end of the transition period. As a result, where litigants in the UK are aware of claims against defendants who are based in EU countries, they should consider whether to commence litigation now to benefit from the availability of current streamlined enforcement processes with EU member states.

The current position

The Recast Brussels Regulation governs jurisdiction in civil and commercial matters in EU member states and provides a system of reciprocal recognition and enforcement of judgments within the EU. It is continuing in force in respect of proceedings commenced during the transition period. However, it is looking increasingly less likely that a replacement to the Recast Brussels Regulation will be agreed before the end of the year as part of any deal on the future EU-UK relationship.

If proceedings look likely in the short term, it is important to consider the arrangements for the period after transition against those in place now. Unfortunately, the fallback options have their own complexities and limitations.

  • The Lugano Convention is an agreement on jurisdiction and enforcement which operates between the EU and Iceland, Norway and Switzerland. It provides a streamlined enforcement process, but without the full benefits of the Recast Brussels Regulation (the main issue being that it does not prevent so-called "Italian torpedo" proceedings – the tactical commencement of proceedings in a member state, usually a state whose courts are slower to progress proceedings, in breach of an exclusive jurisdiction clause).
  • The UK is seeking to join the Lugano Convention as an independent contracting state from the end of the transition period and formally applied for membership on 8 April 2020. The Lugano Convention's ratification process requires the UK to gain the approval of all of the Convention's members, who have up to a year to respond. UK membership of the Lugano Convention is currently being kept on the table as a bargaining chip in negotiations on the future relationship and it is therefore uncertain when, or indeed if, the UK will continue to benefit from the Lugano process.

  • The Hague Convention on Choice of Court Agreements is also an international framework of rules on jurisdiction and recognition and enforcement of judgments. The EU acceded on behalf of its member states on 1 October 2015 and Singapore, Mexico and Montenegro are also members. The UK will accede to the Hague Convention at the end of the transition period, a process which does not require the approval of the other contracting parties.
  • An important limitation of the Hague Convention is that it only applies to contracts with exclusive jurisdiction provisions entered into after the Convention came into force for the state concerned. As the Hague Convention was entered into by the EU and not the UK, there is uncertainty as to whether parties to existing contracts will be able to invoke the enforcement provisions in the Hague Convention. The European Commission's view is that the Hague Convention will only apply to exclusive English or Scottish choice of court agreements concluded after the UK accedes to the Hague Convention in its own right, i.e. from 1 January 2021. The EU Commission's approach is not determinative and there are arguments in favour of continuity of membership for the UK. However, the uncertainty provides little comfort to parties to existing contracts looking for the certainty provided by swift and efficient enforcement regimes. Until the position is resolved, the uncertainty at least provides a basis for an unsuccessful defendant to delay enforcement, by arguing the position on its application.

If neither the Hague Convention nor the Lugano Convention applies, jurisdiction and enforcement matters will be governed by the domestic rules of each member state. EU member states would enforce most foreign judgments under their domestic rules, but the processes have varying degrees of complexity and will usually take significantly longer than is currently the case.

The benefits of commencing proceedings before the end of 2020

Article 67 of the Withdrawal Agreement provides that the provisions of the Recast Brussels Regulation "shall apply to the recognition and enforcement of judgments given in legal proceedings instituted before the end of the transition period". The key point is that proceedings only need to have been commenced before the end of the year in order to benefit from the cross-border enforcement regime in the Recast Brussels Regulation.

Litigants in the UK, with claims against individuals or organisations with assets in EU member states, can benefit from the current streamlined procedures and avoid uncertainty by commencing proceedings now. In England and Wales, the requirement to "institute" proceedings will require the issuing of a claim form. In Scotland, it will require service of the initiating Summons, Petition or Initial Writ on the defender.

Litigants in EU member states with claims against individuals with assets in the UK can also benefit from the streamlined procedures by commencing proceedings now.

There are, of course, costs implications of commencing litigation and so starting proceedings simply to secure the benefit of the Recast Brussels Regulation, could be ill advised. However, commencing the claim before the year end might well be the right decision, if it is clear proceedings are necessary and they were to be issued shortly in any event. 

In other cases, the potential downsides of waiting have to be kept in perspective. EU countries will still enforce most judgments of the UK courts (and vice versa), with limited opportunity to challenge the original judgment. The concerns are that domestic enforcement processes are often lengthier and more costly.  

Therefore, the timing of litigation is a balancing act over the coming months. At Dentons, we have colleagues in many EU countries who are well placed to advise on the domestic enforcement regimes to which it may be necessary to have recourse, and we can guide you through the process of deciding on the best time to progress a claim.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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