The Hague Convention 2019
On Friday 12 January 2024 the justice minister, Lord Bellamy, signed the Convention of 2 July 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (the “Hague Convention 2019” or the “Convention”) on behalf of the UK.
The purpose of the Convention is to make it easier to a enforce a court judgment from one jurisdiction in another signatory state. This is of particular significance when a judgment debtor, or the majority of their assets, is based outside of the UK.
The signing of the Convention should be welcome news to anyone who already, or hopes, to conduct business internationally, particularly within the European Union which remains one of the UK’s biggest trading partners.[1]
Although the UK has now signed the Convention it will not come into force for another 12 months. The Convention will only apply to proceedings that are started the day after the Convention comes into force.
What is the Hague Convention 2019?
The Convention is relevant to most commercial and civil disputes (including consumer and individual employment contracts) where there is a cross-border element. The effect of the Convention will be to give mutual recognition to court judgments in signatory countries by introducing commonly accepted conditions for recognition and enforcement, as well as agreed grounds for refusal.
However, as indicated above, not all commercial and civil disputes fall within the scope of the Convention. Family law matters, insolvency and intellectual property are all among the excluded matters.
Contracting parties are also able to declare that the Convention does not apply to other specific matters. We anticipate that the strategic advantages and disadvantages of doing so will need to be carefully considered on a case-by-case basis when entering into new contracts.
Who are the signatories?
In addition to the UK, the Convention has been signed by the EU (excluding Denmark), Ukraine, Uruguay, Russia, the USA, North Macedonia, Costa Rica, Montenegro, and Israel.[2]
Although the Convention has been signed by the above countries, several (including the USA) are yet to ratify it. Until they do, the Convention will have no force in these countries.
Comment
The signing of the Convention by the UK is particularly good news for individuals, consumers and SMEs as the UK is not currently part of the Lugano Convention.[3] The Lugano Convention is similar to the Hague Convention 2019 in that it provides for the recognition and enforcement of a wide range of civil and commercial judgments but between the EU(including Denmark) and EFTA states only.[4]
When the Convention comes into force in the UK it will provide businesses with greater certainty and predictability when it comes to the enforcement of contracts. Companies and individuals will be able to issue legal proceedings in the UK and have greater certainty that any judgment obtained in the UK will be enforceable in other signatory jurisdictions. Given the volume of trade between the UK and the EU, this should be welcome news for many businesses.
The Convention should also reduce the cost of enforcing judgments in other jurisdictions.
The exclusion of insolvency matters however will come as a disappoint to some. Creditors and IPs in insolvency proceedings where some or all of the debtor’s assets are located outside of the UK will have to continue to take legal advice in the jurisdiction in which the assets are located and follow the specific steps and bilateral arrangements that are applicable there.
Even though the UK has signed the Hague Convention 2019, they should continue to pursue the application to rejoin the Lugano Convention as it will provide certainty in Denmark and the EFTA states which are not Hague Convention 2019 signatories.
[1] https://www.gov.uk/government/statistics/uk-overseas-trade-in-goods-statistics-january-2023/uk-overseas-trade-in-goods-statistics-january-2023-commentary
[2] https://assets.hcch.net/docs/36b240ac-8228-481d-a33b-3716baf4c656.pdf
[3] UK was part of Lugano prior to the UK’s exit from the EU. The UK applied to re-join Lugano on 8 April 2020 but the application must be approved by all parties to the Lugano Convention. So far the EU has indicated that they are not willing to support the application as it considers the question to be linked to negotiations on the future relationship between the UK and EU.
[4] The EFTA member states are Iceland, Lichtenstein, Norway and Switzerland.