Lugano - Increased Pressure from the Law Societies of England and Wales, Scotland and Northern Ireland on the European Council
11pm on 31 December 2020 draws ever closer and, at time of writing, the United Kingdom remains in a no deal situation.
From a litigation perspective this means the landscape for dispute resolution once the clock ticks over to 11:01pm on 31 December 2020 remains uncertain and confusing given the different conventions that may apply depending on the outcome of the UK’s exit discussions with the EU.
During the Implementation Period (31 January 2020 to 31 December 2020) where a claim can be issued is governed by:
The Brussels regime (including Regulation (EU) 1215/2012, Brussels I (recast (“Recast Regulations”)
the Lugano Convention on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters 2007 (“Lugano Convention”)
and the Hague Convention on Choice of Court Agreements 2005 (“Hague Convention”).
In accordance with the Recast Regulations if there is no exclusive jurisdiction clause governing a contractual dispute then, generally, claims should be issued in the court of the EU Member State where the defendant is domiciled, or where an incident occurred in the case of personal injury claims. There are some exceptions to these general rules, which generally favour individuals and allow them to bring a claim in the home Court in certain circumstances[CP3] [JA4] .
Whilst the UK has formally applied to become an independent signatory state to the Lugano convention, admission is presently being blocked by the EU and it is likely to be individuals and small businesses for which the effect will be most keenly felt.
David Green, president of the Law Society of England and Wales comments “Lugano means that a consumer in Germany who is let down by goods sent from the UK (and vice versa) will be able to seek redress in their local court rather than having to raise multiple legal cases in different jurisdictions – a move out of the reach of all but deepest pockets.”
To this extent, the Law Societies of England and Wales, Scotland and Northern Ireland, together with other organisations focused on protecting commerce and the rights of consumers such as the British Retail Consortium, the British Chamber of Commerce EU and Belgium and Which? have written to the president of the European Council and others urging for the UK to be readmitted to the Lugano convention once the transition period has ended.
If the UK is readmitted to the Lugano convention it will mean there will be few significant changes to cross-border litigation between the UK, Norway, Switzerland, Iceland and the remaining 27 EU states. Readmission to the Lugano convention would mean UK courts would continue to recognise and enforce the judgments of the other contracting states, and vice versa.
If the UK were readmitted to the Lugano convention, there would be continued certainty for litigants as it puts in place a predictable regime for disputes involving defendants in any of the signatory states. If the UK is not readmitted to Lugano, litigants would be left with uncertainty and a choice of different agreements or conventions governing their claim, depending on which jurisdiction ultimately governs the claim.
The benefits of the Lugano convention are that it protects the ordinary litigant and those litigants of limited financial means, enabling them to pursue litigation in their home courts in certain circumstances as well as providing them with a regime to enforce judgments obtained in one signatory state and enforced in another. This will particularly benefit litigants if they are in a weaker position than their opponent particularly in respect of their financial position; further it applies not just to disputes relating to consumers but also to those involving employees, service providers or family maintenance agreements.
Without the framework which the Lugano convention provides, the position for those seeking to resolve cross-border disputes through the Courts would mean that there is an initial argument to be had over which jurisdiction applies and to establish whether the ultimate judgment can be both recognised and enforced.
Clearly this additional step makes it easier for those with deeper pockets to benefit from causing a delay to justice by utilising their favoured legal systems and, in the process, denying justice to those without access to such means.
, a partner specialising in claims following accidents and medical malpractice abroad who also sits on the Law Society Private International Law Working Group comments:
“ I hope that the Law Society’s efforts make it clear to our EU member state leaders that the absence of reciprocal agreements will impact individuals and small businesses, and not just large corporate entities. The benefits of the UK being a party to the Lugano will run both ways, not just in the UK’s direction. “
Whatever the ultimate resolution to the position, what is clear is that the litigation landscape will remain uncertain following the expiration of the Implementation Period as there will be some delay to the UK signing up to Lugano if indeed such accession is permitted.
It really is a case of watch this space…..
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