International pact

When the UK exited the EU and the transitional phase came to an end last year, legal proceedings between the UK and EU countries became much more complex and burdensome. It had been hoped by some that the EU would recommend that the UK join the Lugano Convention after Brexit.

The Lugano Convention   provides for the recognition and enforcement of a wide range of civil and commercial judgments between the EU and European Free Trade Association (‘EFTA’) states. EFTA member states include Iceland, Liechtenstein, Norway and Switzerland. It is an international agreement and other states may join subject to approval of the present parties to the agreement.

Approval

A state seeking to join the pact must obtain the approval of all parties to the agreement. The European Commission has taken the view that the EU should not give
its consent to the accession of the UK to the Lugano convention. The Commission, in a statement, has said that the Lugano convention provides a means of cooperation between EU states and EFTA countries, of which the UK is not party. Since the UK has no special link with the internal market, there was no reason to depart from the usual rules of international cooperation. The Commission has said the appropriate mechanism for cooperation in judicial matters in civil matters is through the framework of the Hague Convention.

Challenges

The Commission’s recommendation is likely to cause challenges for the UK, and countries such as Ireland, with deep ties to the UK market. The Lugano Convention allows legal judgements to be enforced easily across borders. It means, for example, that consumers are able to take companies based in different countries to court domestically if they are unhappy with a product. The rules under the Hague Convention are far more complex and Hague rules do not apply to consumer, employment or intellectual property cases. They also require specific ‘exclusive jurisdiction’ clauses to be inserted in contracts.

Member states will vote on whether to allow the UK to join the Lugano Convention. The Commission’s recommendation is not binding on them. Some member states have indicated support for the UK joining the pact, but the Commission’s recommendation is likely to have some effect in persuading states to vote against the UK.