European Commission has declined consent to the accession of the UK to the Lugano Convention

The European Commission has officially announced its opposition to the UK’s application to join the Lugano Convention 2007.

‘In view of the nature of the Lugano Convention (see below, section 2.1.) and the existing framework of judicial cooperation with third countries (see below, section 2.2.), the Commission considers that the EU should not give its consent to the accession of the United Kingdom to the Lugano Convention.’

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Brussels, 4.5.2021 COM(2021) 222 final COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Assessment on the application of the United Kingdom of Great Britain and Northern Ireland to accede to the 2007 Lugano Convention 

‘Experts at London law firm Dentons say that ‘UK accession to the Lugano Convention is a significant issue because membership would enable more judgments to be swiftly recognised and enforced across borders.’ They note that ‘the Lugano Convention is wider in scope than the Hague Convention, the main difference being that the Lugano Convention applies to contractual relationships governed by non-exclusive and asymmetric (one-sided) jurisdiction clauses, as well as exclusive jurisdiction clauses.’

Law firm Farrer & Co has expressed the view that enforcement of foreign judgments abroad could become an uphill struggle and UK courts could be a ‘less attractive venue for international litigation’ if the UK’s application to accede is rejected.’ STEP Industry News Bulletin 06.05.2021.

The instruments that prior to Brexit determined governing law,Regulation (EC) No 593/2008 on the law applicable to contractual obligations (Rome I) and Regulation (EC) No 864/2007 on the law applicable to non-contractual obligations (Rome II), were implemented in UK domestic law and continue to apply post-Brexit. 

Articles 3 and 4 of Rome I lay down the basic rules, namely that a contract is generally to be governed by the law chosen by the parties – this choice may be express or clearly demonstrated by the terms of the contract or the circumstances of the case. In the absence of choice of law, the law of the contract will be that of the habitual residence of the seller of goods or the provider of services. There are exceptions to this rule, such as if the contract relates to immovable property (whereby the Lex Situs rule will apply). 

The choice of law in a tort claim is governed by the Rome II regulation. Under article 4 of Rome II, the law applicable to non-contractual obligations arising out of a tort will be the law of the country where the damage occurs. This will be irrespective of the country in which the event giving rise to the damage occurred, or where the indirect consequences of the tort may be felt. However, where both parties to the dispute have their habitual residence in the same country at the time the damage occurs, the law of that country shall apply, and where the tort is manifestly more closely connected with another country, the law of the other country will apply. 

Under English Law, in a contract or tort action ‘in personam‘ (i.e. against a person), the English court has residual jurisdiction in three situations:

(i)     where the defendant has been served with the statement of claim whilst in England;

(ii)     where a person who might otherwise be excluded, submits to the jurisdiction; or

(iii)    if the case comes within CPR, r. 6.20, where discretionary leave is granted for service of proceedings outside of the jurisdiction. 

Following Brexit, The doctrine of Forum non conveniens also applies.

The post-transition period trade deal now in force does not provide for any other civil justice regime. 

For cases commenced after 1 January 2021, if there is an exclusive jurisdiction agreement and the chosen court is a contracting party to the Hague Convention, the 2005 Hague Convention will apply. In the absence of this, decisions on jurisdiction and enforcement will fall to domestic law.