Out-Law / Your Daily Need-To-Know

Out-Law News 6 min. read

UK to sign Hague Convention 2019 on cross-border enforcement of judgments

Businesses should be able to enforce UK court rulings more easily in other countries in future – and enforce judgments made by foreign courts in the UK too – once the UK accedes to the 2019 Hague Convention, experts in dispute resolution have said.

Emilie Jones and Richard Dickman of Pinsent Masons were commenting after the UK government confirmed on Thursday that the UK “will sign Hague 2019 as soon as practicable”. It consulted on the issue earlier this year.

“This is a very positive development for businesses,” said Jones. “A robust and predictable regime for the enforcement of judgments across borders gives businesses comfort that they can use litigation to resolve their disputes and have confidence about the enforceability of their resulting judgment regardless of the whereabouts of the counterparty or their assets.”

“Joining Hague 2019 has been considered by many to be something of a ‘no brainer’, as illustrated by the unanimous support for doing so amongst those who responded to the consultation, and it is encouraging that the UK government appears so committed to press forward with accession as soon as possible,” she added.

The 2019 Hague Convention requires contracting parties to the convention to recognise and enforce civil and commercial judgments which fall within its scope, according to a set of common rules. It is broad in scope, in terms of the types of judgments to which it applies: for example, it covers employment and consumer matters – these are not in-scope of another international treaty, the Hague Choice of Court Convention 2005, which the UK is a signatory to.

Hague 2019 was concluded on 2 July 2019 and entered into force on 1 September 2023. The EU, excluding Denmark, and Ukraine were the first two states to ratify or accede to the Convention. The Convention will also begin applying to Uruguay next year. Several other countries have signed the Convention but are still to ratify it, including the US.

The ability to enforce judgments cross-border is important for international trade and investment.  Predictable, streamlined processes for such enforcement reduce costs and increase certainty for businesses.  In particular, they mean that businesses can resolve their disputes in their jurisdiction of choice in the knowledge that, subject to any applicable limitations, the resulting judgment should be enforceable where the counterparty or their assets are located.

Many countries have domestic rules which allow judgments from other countries to be recognised and enforced in certain circumstances, but those rules differ, so that businesses wishing to understand their cross-border enforcement position often need to incur the costs of taking foreign law advice on enforcement – and may face slow processes and uncertainty. 

In addition to domestic rules, some countries are party to bilateral or multilateral treaties, which make enforcement between the countries involved more certain and straightforward in certain circumstances.  However, these do not cover all jurisdictions and often have limitations.

For example, there is no judgment enforcement treaty between the UK and US, meaning a UK judgment can only be enforced in the US using the laws and procedure of the particular US state where enforcement is sought. In addition, Brexit has meant that the UK ceased to be a member of the Brussels Recast Regulation, which provides a robust framework for the enforcement of judgments between EU member states, as well as the broadly similar Lugano Convention, to which the EU as well as Norway, Switzerland and Iceland are party. 

The only multilateral judgment enforcement treaty involving the EU which the UK now benefits from is the Hague Choice of Court Convention (Hague 2005), which provides for the enforcement of judgments between convention parties – including the UK, EU and a few other jurisdictions – but only where a judgment has been given by a court specified in an exclusive jurisdiction clause between the parties.  Hague 2005 does not therefore assist with the enforcement of UK judgments in circumstances where there is no contract between the parties. It is also unlikely to apply to contracts where the parties have agreed an asymmetric jurisdiction clause that provides that while that one party may only start proceedings in a specified jurisdiction, the other party has greater freedom as to where it sues.  Such clauses are common in finance contracts.

Dickman said: “For the UK, and those who like to resolve their disputes in the UK, joining Hague 2019 has particular significance post-Brexit. The loss of access to the Brussels Recast Regulation and Lugano Convention has caused some complexities and uncertainties in relation to the enforcement of UK judgments in the EU and some of the Lugano states. While most UK judgments remain enforceable in those states under either domestic laws or Hague 2005, acceding to Hague 2019 – to which the EU is already a party – will provide a more comprehensive enforcement solution EU-wide. This will give businesses still concerned about the impact of Brexit more confidence in using the UK courts to resolve their disputes.”

“The potential of Hague 2019 goes wider than just the EU, though. Its ambition is to be a global enforcement framework for court judgments, akin perhaps to the New York Convention for arbitral awards – an enforcement regime to which over 170 nations are party. Whether that ambition is achieved, and therefore the global utility of Hague 2019 for businesses, will depend on how many states accede to the convention. Some important jurisdictions like the US, with whom the UK does not currently have treaties to assist with the mutual enforcement of judgments, are already signatories. If they, too, were to proceed to ratify the convention, that would make UK membership of Hague 2019 even more beneficial for businesses,” he said.

The UK government said respondents to its consultation had been “clear” that “the merits of Hague 2019 … outweigh any potential downside”.

“The UK joining Hague 2019 stands to benefit both businesses and consumers operating and living across borders, by providing greater legal certainty about the mutual recognition and enforcement of judgments given in the UK and in another contracting state,” the government said. “Joining Hague 2019 should also increase the attractiveness of the UK for dispute resolution, given how the Convention will facilitate recognition and enforcement of judgments from UK courts.”

“The Convention’s already considerable global reach is set to expand over the coming years, with the US, Israel and a number of other countries having already signed Hague 2019. Joining Hague 2019 now will allow the UK not only to secure the benefits of the Convention but also to play a role in driving the development of the Convention as judges in the UK will be amongst the first to apply and interpret its terms,” it said.

The government said it acknowledged that there may be “downsides” to acceding to the Convention – including “risks” that the UK would be “obliged to recognise and enforce foreign judgments under Hague 2019 when there would not have been such an obligation under the common law or existing arrangements”, as well as “where there are concerns in respect of procedural fairness and rule of law in the contracting party from which the judgment originates”. It said, though, that it “considers that there are adequate safeguards under Hague 2019” to address those potential issues.

“Firstly, Article 29 permits a state to make a notification preventing the Convention applying with another contracting state at the time of ratification of that state,” the government said. “Second, if the UK is already applying the Convention with a contracting state, the recognition and enforcement of judgments can be refused if one of the grounds in Article 7 can be established, including if certain procedural fairness requirements have not been met and where recognition or enforcement would be manifestly incompatible with the public policy of the UK.”

Jones said that Hague 2019 has “limitations”, including the fact that, unlike the Brussels Recast Regulation and Lugano Convention, it does not regulate the allocation of jurisdiction between the courts of different states. This means that it will not address the increased risk, created by Brexit, of disputes about jurisdiction in cross-border cases involving the UK and EU member states or Lugano countries. Jones said businesses and their advisers will also need to understand and navigate a number of exceptions and requirements included in Hague 2019, with care.

Jones said: “The Convention will not come into force for the UK until 12 months after ratification takes place. Even then, it will only apply to judgments given in certain proceedings commenced after that date: Hague 2019 provides that it only applies to the enforcement of a judgment if, when the proceedings giving rise to that judgment began, the Convention had effect between the state of the court giving the judgment and the state for enforcement. As a result, businesses will still need to carefully consider cross-border enforcement issues both when agreeing dispute resolution provisions in contracts and when a dispute arises.”

We are processing your request. \n Thank you for your patience. An error occurred. This could be due to inactivity on the page - please try again.