After much speculation over whether there was going to be a “hard Brexit”, the Trade and Cooperation Agreement between the UK and the EU was completed at the end of 2020. Significantly for dispute resolution lawyers, the agreement is silent on how the UK and the EU will harmonise questions of jurisdiction and the recognition and enforcement of judgments.
Karen Jacobs and Ian Gatt QC give a shortened version of an article that was originally published by the European American Chamber of Commerce in collaboration with Stewarts and CMS. You can read the full version here.
The EU perspective
Parties who initiated proceedings before 31 December 2020 still benefit from the Recast Brussels Regulation (Regulation (EU) No 1215/2012), which applies between EU Member States and the UK. The Brussels Recast Regulation regulates the jurisdiction of the courts of the EU member states and facilitates the mutual recognition and enforcement of judgments in civil and commercial matters preventing parallel proceedings and the risk of conflicting decisions in different Member States.
For proceedings initiated after 1 January 2021, the Recast Brussels Regulation no longer applies, neither as regards the issue of jurisdiction nor the recognition and enforcement of judgments. In consequence, the UK has applied to join the Lugano Convention, which offers a standard comparable to the Recast Brussels Regulation for matters between the EU, its Member States and Switzerland, Norway and Iceland. In June 2021, however, the EU Commission stated that it was not in a position to give its consent to the UK’s application. While the Council of the EU will have the last word, given the position of the Commission, approval for the UK’s accession may be improbable from an EU perspective.
In the meantime, an international convention which does apply is the 2005 Hague Convention on Choice of Court Agreements, to which the UK acceded on 1 January 2021 respecting parties’ choice of court agreements. The 2005 Hague Convention recognises only exclusive choice of court agreements and the process for recognition and enforcement of judgments is narrower than and not as straightforward as the Recast Brussel Regulation.
Furthermore, there is a disagreement between the EU and the UK, on whether the 2005 Hague Convention applies from when it entered into force for the EU in 2015 or whether it only applies after the UK joined the Hague Convention in its own right on 1 January 2021.
The EU Commission has recently proposed the EU’s accessions to the 2019 Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters. Under this Convention, which is open to accession worldwide, the recognition and enforcement of foreign judgements will be harmonized and facilitated, but so far it has been signed only by very few countries.
The UK perspective
London has been at the centre of global trade for centuries and its Commercial Courts have helped merchants resolve their commercial disputes throughout this time. Given the challenges brought about by Brexit, the question is whether the UK’s Commercial Courts have decreased in popularity?
According to the Portland Commercial Courts Report 2021, the opposite is true. The Commercial Court had a record year, quickly recovering from a dip in activity and re-establishing a six-year-long growth trend. In that report, 292 judgments handed down between April 2020 and March 2021 were reviewed. The conclusion drawn was that while the proportion of litigants from the 27 EU member states continued to decline following Brexit, the impact was offset by other foreign litigants, most notably from the US and Russia.
Delving deeper, in our experience, the London Commercial Court has responded well to recent challenges particularly during the pandemic. Stewarts was on the verge of starting a trial in the Commercial Court in London when the pandemic first struck. The case of National Bank of Kazakhstan and the Republic of Kazakhstan v The Bank of New York Mellon and others, went ahead, and we ran the court’s first virtual hearing. The wheels of commercial justice kept running smoothly when other courts across the world were closing their doors. In May of this year, in another of Stewarts’ cases, Mr Justice Foxton delivered his judgment after a 10-week trial involving multiple parties from multiple jurisdiction. The judge managed to distil the facts and legal argument swiftly into a readable and impressive judgment of 218 pages thus demonstrating the high calibre judges which makes the Commercial Court so attractive.
The Business and Property Courts (the umbrella term for the Commercial Courts) are always looking to improve their processes. In the past few years, when faced with a large number of electronic documents and increasing costs, new rules have been introduced to make disclosure more cost-effective, streamlined and flexible. In April, new rules on witness statements came into force to ensure witnesses focussed on the core of their evidence, their personal knowledge and did not stray into argument. For European civil jurisdictions, the lack of cross-examination of witnesses may be regarded as an impediment to a party’s ability to test the evidence and get to the heart of the dispute.
From the UK’s perspective, given the continued success of the Business and Property Courts, it is anticipated that they will continue to improve and respond to challenges. This will provide businesses litigating in the Business and Property Courts confidence that their rights will be protected, just as the merchants trading centuries previously required.
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