Monday, July 4

The English sentences after Brexit | Business

Thomas Ondarra

Trade between the UK and the European Union (EU) amounted to € 445 billion in the year before Brexit. Some of these business transactions will end in a dispute that will be resolved (most of the time) through court proceedings or (to a lesser extent) through commercial arbitration.

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The English judgments handed down in these judicial proceedings, to be effective in Europe, must be recognized and enforced in the destination State. As is known, the recognition of a foreign judgment is the process by which that foreign judgment is made effective in another country, so that, once recognized, it can be executed in the destination country as if it were a national judgment. it will be.

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Until the UK left the EU, English sentences could be recognized and enforced in the EU without much difficulty. That is, they could circulate freely within the EU. They enjoyed, if you can say so, a community passport. The free circulation of English judgments was obtained thanks to Regulation 1215/2012 (commonly called Brussels I Regulation), which is based on the principle of mutual trust, by virtue of which the courts of the EU States grant equal value and position to the judgments of the courts of any other EU State.

Following the departure of the United Kingdom from the EU, Regulation 1215/2012 is no longer applicable (except in exceptional cases, in which the judicial procedure has started before January 1, 2021), which determines the end of the free movement of English judgments in the EU.

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To remedy this situation, in which English judgments are clearly in a worse position compared to the pre-Brexit stage, the United Kingdom has applied to be part of the Lugano Convention. The Lugano Convention contains a regime for the recognition of judgments similar to the first version of the Brussels Regulation (albeit less automatic and efficient), and applies to judgments handed down in Switzerland, Iceland and Norway, which must be recognized in the EU and Denmark (and vice versa).

However, for the United Kingdom to become part of the Lugano Convention, it is necessary that all its members consent to it. Norway, Switzerland and Iceland gave their consent, but not the EU or Denmark. Furthermore, the European Commission, in a communication dated May 4, has made clear its recommendation not to admit the United Kingdom to join the Lugano Convention. The reason given is that this agreement constitutes an essential element of the EU justice area, so it should be open only to third countries that have a relationship of particular integration with the EU. The United Kingdom has been, since January 1, 2021, a third country with which the EU has a trade agreement and, therefore, does not have that particular link. The EU Council must now decide whether to follow that position of the European Commission.

If the UK finally does not agree to the Lugano Convention, English judgments can only be recognized in the EU Member States today through the Hague Convention of June 30, 2005 on choice of forum agreements or by applying the rules national. This represents a clear step back from the previous situation. Thus, in the first place, the Hague Convention applies exclusively to decisions issued in civil and commercial matters, and does not include within its objective scope of application matters such as consumers, transport, work or insolvency. Second, and what is more relevant, the Hague Convention is only applicable to judgments rendered in the United Kingdom by virtue of an exclusive submission clause to its courts, but it leaves non-exclusive submission clauses out of its scope. or asymmetric.

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Non-exclusive or asymmetric submission clauses are those in which the parties submit to a certain court, but one of them (not the other) can file the claim both before that court to which the parties have expressly submitted and before any other. competent court. They therefore grant a significant advantage to one of the parties. This is particularly relevant in financing contracts, in which it is customary for the parties to submit, for example, to the courts of London, but the lender or financier also reserves the possibility of suing both in London and in any other court competent. Ultimately, after Brexit, if the parties to a contract want to submit to the English courts, they will have to do so under an exclusive submission clause if they want the judgment to be recognized later in the EU under the 2005 Hague Convention .

Lastly, and as an additional disadvantage, it should be noted that the Hague Convention does not contain an automatic recognition and enforcement regime (as did the Brussels I Regulation and, to a lesser extent, the Lugano Convention) , which will logically determine that this recognition is more complicated and lengthy.

When the Hague Convention is not applicable (due to having passed the judgment to recognize in a matter that is outside the scope of the Convention or by virtue of a non-exclusive submission clause), the internal legislation of each country must be applied ( in Spain, the Law of International Legal Cooperation), which will also make the recognition more complex and lengthy, and that the same English sentence can be recognized in some countries and not in others.

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In short, after Brexit, the free movement of English judgments within the EU states presents difficulties that did not exist before. Therefore, the parties to a financing contract (or of another nature), when submitting their disputes to English jurisdiction and law, must carry out a careful analysis to verify if the advantages outweigh the disadvantages and if not It is more advisable to choose a jurisdiction within the EU that can guarantee to a greater extent and for the entire EU space (as well as for Iceland, Norway and Switzerland) the effectiveness of the judgment that is handed down at the time.

Álvaro López de Argumedo He is a lawyer for Uría Menéndez.

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