Hague convention makes commercial sense

On 12 January the UK signed the 2019 Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters.

This welcome development will give confidence to commercial parties that UK judgments within the scope of Hague 2019 will be recognised and enforced by other contracting states – including EU member states (except Denmark) – after the convention enters into force for the UK.

This article gives an overview of Hague 2019, the key benefits to the UK of joining and the next steps required for Hague 2019 to enter into force for the UK.

Hague 2019 sets out a framework of common rules to facilitate the recognition and enforcement of a wide range of civil and commercial judgments between contracting states to the convention. A judgment given in one contracting state’s court will be recognised and enforced in another contracting state, without a review of the judgment’s merits, in accordance with the rules set out in Hague 2019. Recognition or enforcement can only be refused for limited reasons, such as if the judgment was obtained by fraud, or on public policy grounds.

Hague 2019 entered into force for all EU member states (excluding Denmark) and Ukraine in September 2023, and will extend to Uruguay from October 2024. Several other countries – including the US, Israel and Russia – have signed the convention and are expected to ratify it in the near future, thereby expanding its global scope and amplifying its benefits for contracting states.

A potential concern with Hague 2019’s future expansion is the possibility that a state without a reliable or fair judicial system may join the convention. In the government’s view, this is addressed by a safeguard contained in Hague 2019. This enables the UK to prevent the convention from applying between it and a future contracting state (the government gives the example of Russia).

Key benefits of joining

The government announced its intention to join Hague 2019 last November, after considering the responses it received to a 2023 consultation and wider stakeholder feedback. There was a consensus that the UK should join and that Hague 2019’s merits outweigh any potential downsides. Joining is expected to increase legal certainty for businesses and consumers operating across borders, in turn encouraging trade and investment, enhancing access to justice, and increasing the attractiveness of the UK as a preferred venue for dispute resolution.

A significant benefit of the UK joining is that the convention will fill a gap in the current framework for the recognition and enforcement of civil and commercial judgments between the UK and EU member states. Post-Brexit, the Brussels Recast Regulation and Lugano Convention no longer have effect for the UK, resulting in a complex and fragmented approach to enforcement between the UK and individual EU and European Free Trade Association (EFTA) member states. Unlike the intra-EU instruments, Hague 2019 does not include direct rules on the allocation of jurisdiction between states, so this gap will continue to exist. Also, unlike the Lugano Convention, no EFTA member states are currently signatories to Hague 2019 (although this could change). Nevertheless, the UK joining Hague 2019 represents a positive step in regaining a uniform approach to the recognition and enforcement of UK court judgments in EU member states (except Denmark), and vice versa.

The broad scope of Hague 2019 is another key benefit. The UK and EU member states are already contracting parties to the 2005 Hague Convention on Choice of Court Agreements, along with several other states. Hague 2005 is limited to the enforcement of judgments deriving from exclusive choice of court agreements. Hague 2019’s regime is complementary to Hague 2005, permitting the enforcement of judgments deriving from choice of court agreements to which Hague 2005 does not apply, such as asymmetric or non-exclusive choice of court agreements. This makes joining Hague 2019 particularly attractive for parties involved in the UK’s financial services industry, in which non-exclusive choice of court agreements are often used. Hague 2019 contains a number of additional bases for enforcement, including for judgments deriving from certain contractual claims where there is no choice of court agreement, non-contractual claims and trusts claims. Like Hague 2005, Hague 2019 does not apply to judgments deriving from certain matters, such as family law, insolvency and intellectual property. While the UK declared that certain insurance matters are excluded from the scope of Hague 2005, the government does not intend to make a similar declaration when implementing Hague 2019.

Joining Hague 2019 will facilitate the reciprocal recognition and enforcement of a wide range of civil and commercial judgments between the UK and other contracting states. Parties involved in applicable litigation commenced after the convention’s entry into force for the UK stand to benefit from reduced costs, greater predictability and increased efficiency in international enforcement proceedings.

Next steps

Having signed Hague 2019, the UK will now need to ratify it. Ratification will occur after the necessary domestic implementing legislation and rules have been put in place. Hague 2019 will then enter into force for the UK 12 months after ratification.

By signing Hague 2019 swiftly after announcing its commitment to join the convention, the government has signalled its commitment to helping improve legal certainty for businesses and consumers involved in cross-border litigation. Interested parties would be well advised to familiarise themselves with the Hague 2019 regime and closely monitor future developments in the UK’s implementation of the convention.

Louise Freeman is a partner, Tom Cusworth an associate and Catherine Karia a professional support lawyer at Covington, London