It has been confirmed that the Hague Judgments Convention (“Convention“) will enter into force following the accession of the European Union (excluding Denmark) and the ratification by Ukraine on 29 August 2022. Under the terms of the Convention, the Convention will enter into force on the first day of the month following the expiry of 12 months after two states formally ratify or accede to it. The Convention will therefore take effect for the EU and Ukraine on 1 September 2023. Below is a short briefing note, explaining the background to the Convention, how it operates and its relative advantages and disadvantages.
What is the Convention?
- The Convention is an international convention that aims to create a common framework for cross-border recognition and enforcement of court judgments between contracting states.
- It is the latest instrument to come out of the Hague Conference on Private International Law ‘s “Judgments Project,” and follows the 2005 Convention on Choice of Court Agreements.
- The Convention was concluded in 2019, and has so far been ratified by 26 of the 27 EU member states (excluding Denmark) and Ukraine. It will enter into force for these jurisdictions on 1 September 2023.
- Several jurisdictions have signed the Convention but not yet ratified it, including Costa Rica, Israel, Russia, the United States and Uruguay.
How does the Convention operate?
- The Convention provides for the recognition and enforcement of a court judgment from one contracting state in the courts of another with no further review of the merits of that judgment. Recognition and enforcement may only be refused on the grounds stated in the Convention, such as public policy, due process, or where it is inconsistent with a prior judgment.
- Contracting states may effectively prevent the Convention from applying to specific types of matters by issuing a declaration that they have a “strong interest” in the Convention not applying to such matters. For instance, the EU has declared that it will not apply the Convention to non-residential leases of immovable property in the EU.
- The Convention represents the minimum requirements for recognition and enforcement of foreign judgments – it does not prevent recognition and enforcement under national law, bilateral, regional or other international instruments, except for immovable property. The Convention, therefore, provides a “floor” rather than a “ceiling.”
What are the advantages of the Convention?
- It has the potential to provide a unified global framework for the recognition and enforcement of court judgments, reducing costs and fulfilling the Hague Conference’s stated aim to, “increase certainty and predictability, promote the better management of transaction and litigation risks, and shorten timeframes for the recognition and enforcement of a judgement in other jurisdictions.”
- All jurisdictions are eligible to join the Convention. There is potential, in time, for the Convention to become a near-universal solution for recognition and enforcement of court judgments, in the way that the New York Convention has become for the recognition and enforcement of arbitral awards. This contrasts favorably with other conventions, such as the Brussels Regime and Lugano Convention, which are geographically limited to EU member states and European Free Trade Association member states respectively.
- The Convention is much broader in scope than the 2005 Hague Convention of Choice of Court Agreements, applying to judgments where the court took jurisdiction under a non-exclusive jurisdiction clause, including asymmetrical jurisdictions clauses (see para 217). It also applies to a wider range of disputes, including consumer cases, employment matters, and those relating to rights in rem and leases of immovable property.
What are some of its limitations?
- The Convention only applies to civil and commercial judgments, and so does not apply to criminal, revenue, customs or administrative matters. Certain civil and commercial matters are also excluded, including family law matters, insolvency, privacy, intellectual property, certain antitrust matters, arbitration and related proceedings and interim measures.
- The Convention applies only to the recognition and enforcement of judgments but does not address the jurisdiction of a court to hear a dispute until the enforcement stage, increasing the risk of parallel proceedings in different jurisdictions. The Brussels Regime, Lugano Convention and Hague Convention on Choice of Court Agreements are so-called “double conventions,” addressing both jurisdiction and the recognition and enforcement of judgments, reducing the likelihood of parallel proceedings. The Judgments Project has begun provisional work that may eventually lead to a new instrument addressing jurisdiction in cross-border litigation, but this is expected to be many years in the making.
- Contracting states may make declarations 1) limiting the Convention’s application to specific matters (as noted above) or 2) stating that the Convention will not apply between them and another contracting state. These declarations can be made, modified or withdrawn at any time. The extent to which contracting states utilize such declarations may determine how useful the Convention will ultimately be.
- So far, only the EU and Ukraine have ratified the Convention. For it to become the “true game changer” the Hague Conference claims it to be, the Convention will need to be ratified by a significantly more diverse list of jurisdictions. This is especially so as EU member states are likely to continue to use the Brussels Regime for enforcing intra-EU judgments, given the relative advantages of that regime and the Convention’s “give way” provisions for pre-existing and conflicting instruments.
What is the UK’s position on the Convention?
- To date, the UK has neither signed nor ratified the Convention. The UK Government has said that it is considering joining the Convention, and was understood to be preparing to launch a consultation on the issue. It is not clear what effect the recent change of government in the UK will have on the process.
- If the UK joins, under the terms of the Convention, it will not take effect for the UK until one year after ratification, which is likely to be 2024 at the earliest. The Convention does not have retroactive effect, and so would only apply to judgments arising from cases commenced after the Convention came into force for the UK.
- The UK was previously a party to the Brussels Regime and Lugano Convention as a result of its EU membership. These were the preferred frameworks for determining jurisdiction and mutual enforcement of judgments between the UK and EU and Lugano (Iceland, Switzerland, Norway) member states respectively. Following the UK’s decision to leave the EU and the subsequent end of the EU-UK Transition Period on 31 January 2020, the Brussels Regime and Lugano Convention ceased to apply in the UK and so do not apply to the enforcement of judgments in proceedings instituted after that date.
- The UK has applied to re-join the Lugano Convention in its own right, which would allow the UK and EU and Lugano member states to enjoy much the same level of reciprocity on recognition and enforcement of judgments as was the case prior to the UK’s departure from the EU. However, the UK’s application requires the unanimous consent of all current Lugano Convention member states, including the EU. In May 2021, the European Commission stated its opposition to the UK’s membership, and said that the Convention is a more suitable framework for cooperation on the enforcement of judgments between EU and non-EU states. The Commission’s view is not determinative, and the final decision lies with the Council of the European Union, with the approval of the European Parliament. However, it is believed that several key EU member states are opposed, and so the UK’s accession to the Lugano Convention seems unlikely to be approved anytime soon.
- The UK remains a member of the 2005 Hague Convention, which it joined in 2015 by virtue of its membership of the EU and subsequently re-joined in its own right at the end of the EU-UK Transition Period. However, as noted above, this instrument is limited in scope. For judgments not covered by the 2005 Hague Convention, parties are required to rely on a patchwork of bilateral treaties, as well as statutory and common law provisions.