Our response to Government consultation on post-Brexit enforcement of cross-border disputes
24th February, 2023
Ward Hadaway recently submitted a detailed response to a Ministry of Justice (MoJ) consultation on the UK’s accession to the Hague Convention 2019, encouraging the Government to sign up as soon as possible.
However the firm went on to say that ultimately the scope of Hague 19 needs to be extended, in order to ensure that the cross-border reciprocal agreement covers a broader range of legal judgements than would currently be the case.
Background
Since 1 January 2021, holders of an English judgment for proceedings issued after this date have been unable to automatically enforce the judgment elsewhere in the EU, as had previously been the case prior to Brexit. With no comprehensive formal treaty for reciprocal enforcement in place since then, there has been the potential for far greater complexity, delay, bureaucracy, uncertainty and expense when trying to enforce judgements across borders. This has the likely impact of holding back cross-jurisdictional investments and trading activity.
The EU is holding firm that it will not allow the UK to rejoin the instrument that continues to deal with jurisdiction and recognition of judgments in cross border civil and commercial disputes between the EU/EFTA states – The Lugano Convention 2007. Instead the Government is being directed to Hague 2005 and 2019 Conventions as the framework for future cooperation between the EU and the UK in the field of civil judicial cooperation.
The MoJ has run a consultation exercise to understand the business and legal world’s response to this proposal to sign up to and ratify Hague 19, to which Ward Hadaway has submitted a detailed response.
The Response
The firm’s response was prepared by Commercial Disputes Managing Associate Melissa Munday, who also consulted with colleagues from many service lines across the firm. As a leading Northern law firm delivering a full service to its business clients large and small, the firm is able to draw on extensive experience working with clients in a cross-border capacity.
Ward Hadaway also consulted with members of GGI, the world’s leading multi-disciplinary alliance of professional services firms of which it is an active member. It submitted the aggregated results of its European colleagues who responded to the firm’s survey based on the questions posed in the consultation.
The conclusion
Ward Hadaway’s response to the MoJ’s consultation broadly concurs with Law Society President Lubna Shuja, who said last week: “The UK’s prompt accession to the Hague 19 Convention would help to ensure UK businesses have greater confidence entering cross-border contracts and investment relationships…
“The Convention provides legal clarity, reduces costs, increases certainty and predictability. It encourages better risk management and shortens timeframes for the recognition and enforcement of judgements across jurisdictions…
”In essence, it provides effective mechanisms for obtaining redress in other jurisdictions, including for consumer and employment issues.”
Ward Hadaway’s response agrees with the Law Society that “there are many benefits and no downsides to the UK becoming a contracting state to the Convention.” However it does believe that whilst this would be a very positive step, there are still limitations which need to be further addressed, namely the notable exclusion from the scope of Hague 2019 of proceedings where the subject matter and judgment to which they give rise concerns:
- Contracts relating to the carriage of passengers and goods
- Insolvency
- Intellectual property
- Maintenance obligations and
- Family law matters including matrimonial property regimes and other rights or obligations arising out of marriage or similar partnerships.
Such disputes will remain subject to domestic rules for recognition and enforcement requiring detailed legal advice.
Nichola Evans, the commercial litigation partner behind the firm’s response, said, “We were keen to share our views with the MoJ, since we think there is a clear and urgent argument to sign up to Hague 19 in these circumstances. However we were keen to ensure that this isn’t then seen by the Government as “case closed”.
“This answers some, but by no means, all of the cross-jurisdictional legal issues which have been introduced as a result of withdrawing from the EU. As the Government strives to generate more and better business opportunities as a result of Brexit, we need to continue to focus on providing a more comprehensive solution to encompass all claims.
“If we don’t, we are likely to keep an unnecessary barrier to trade, introducing greater expense, complexity and uncertainty, and making investments into and from the EU less attractive.
“In the meantime parties may wish to consider their options such as arbitration given the well-established broader reciprocal regime for recognition of arbitration agreements and enforcement of arbitration awards.”
You can read Ward Hadaway’s complete response to the MoJ consultation here. If you want to discuss whether your own business is affected by the current lack of reciprocal cross-border agreements, contact Melissa Munday.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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