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The Lugano convention ceased to apply to the UK at the end of the transition period. There is no longer any mutual recognition of UK judgments in EU member states.
Without the benefit of the Lugano Convention, enforcement will be governed by the national law of the state where the judgment is being enforced, except where a contract contains an exclusive jurisdiction clause that is afforded the protection of the Hague Convention.
The UK applied to join the Lugano Convention in April 2020, but a final decision has yet to be made - a decision requiring the unanimous consent of all contracting states.
The non-EU members of Lugano have already given their blessing to the UK’s accession, with the EU expected to have followed suit despite views it expressed last year during trade deal negotiations. However, on 12th April 2021, the Commission unexpectedly opposed the UK’s bid to join the Lugano Convention - a stance that has dealt a real blow to the UK’s legal sector and businesses.
The EU’s objection is on the grounds that post-Brexit Britain is neither a member of the European Economic Area nor the European Free Trade Association. The other Lugano members are, unlike the UK, also strongly integrated into the single market. There may also be a concern that allowing the UK to join will give “third countries” grounds to demand membership.
The opposing views on the UK’s accession bid are splitting the national governments, with Nordic and Baltic countries supporting the UK’s application, whilst others such as France strongly oppose it.
Joining the Lugano convention would mean that all judgments of the English courts would be recognised in the EU. That would give certainty and ease of enforcement for all English judgments. Without it, English court judgments risk losing their force within the countries covered by the Lugano Convention.
Unless the UK is permitted to join the pact in its own right, it will pose difficulties for many businesses seeking to enforce an English judgment in the EU. Enforcement will be more uncertain, time-consuming and costly. Smaller and medium-sized enterprises and individuals are those likely to feel the damage the most.
It is, therefore, a priority for the UK to gain membership in Lugano.
A decision will ultimately be made by the bloc’s national governments in the coming weeks, but for now, the position does not look promising.
You can contact our specialist Brexit Team for legal support on the issues discussed, along with any other Brexit related assistance you may require. You can also access our dedicated Brexit Hub or contact us on 0161 941 4000 or email our Brexit Team for further information.