On 8 April the UK applied for membership of the Lugano Convention. Press reports suggest that nine days later, at a meeting between EU Commission officials and those from its 27 member states, the Commission advised states’ representatives that they should not seek to respond to the UK’s request too soon.
The EU Commission, it seems, is keen to avoid taking the UK’s membership of Lugano ‘off the table’ in the ongoing negotiations relating to the UK’s future relationship with the EU.
Should the UK fail to become a member of the Convention when its EU membership transition period expires (on 31 December 2020), the complexity and cost of enforcing judgments handed down in the UK’s three jurisdictions in any country covered by Lugano will increase. Similarly, enforcing a judgment from a Lugano country (for example, France) would also be more complicated and more expensive. Clearly, this would be a bad, and unnecessary, outcome for both the UK and the EU.
What is the Lugano Convention?
Eponymous with the glacial lake located on the Swiss-Italian border, the Lugano Convention is a comprehensive 79 article convention which governs the jurisdiction, recognition and enforcement of judgments in civil and commercial matters between its signatories. Signed in October 2007, it is an important part of the legislative framework that support’s the EU’s Single Market, the touchstone of the EU’s broadly harmonised economic area.
Currently, each EU member state and three of the four European Free Trade Association (“EFTA”) countries (Iceland, Switzerland and Norway) are members. The Convention has not, to date, been extended to any state outside the EU or the EFTA.
Unless each of the 30 states that are contracting parties to the Convention agree to its inclusion, the UK cannot become a member. The Lugano countries must give their unanimous approval. Although the EU Commission has no vote itself, absent it providing a positive recommendation for the UK’s inclusion, its application for membership is unlikely to be accepted.
Why has the UK applied for membership of the Convention now?
The UK has been a member of the Convention since its inception. Its provisions took effect in domestic law in 2009 (see the Civil Jurisdiction and Judgments Regulations 2009 (S.I. 2009/3131).
The UK’s membership of the Convention was based upon its membership of the EU. During the transition period the UK continues to participate as if it were still an EU member state.
The UK Government’s position, advanced by the Ministry of Justice, is to accede to the Convention separate to the negotiations relating to the UK’s future relationship with the EU. In January 2020, the UK received public support from the EFTA members for its application.
What is the process for the UK to become a member?
Under the terms of the Convention the UK was required to send its application for membership to the EU Commission. The Commission then distributes the request and its recommendation. Lugano provides an expectation that an application will be accepted or rejected within one year. There is no obligation therefore for the UK to receive a reply before 31 December 2020.
What happens if the UK application is rejected?
If the Lugano countries do not provide their unanimous consent to the application by the end of 2020 (when the transition period concludes) the UK would immediately cease to be a member of the Convention. All judicial co-operation previously governed by it will become more difficult and, as a result, more expensive. If it becomes more difficult to enforce domestic judgments overseas, it could have significant repercussions on the legal sector in the UK. Certainly, it would introduce an additional question before cross-jurisdictional litigation is commenced. Seeking local law advice regarding enforcement will become essential.
The UK would not be able to form bilateral or multilateral agreements with the majority of the Lugano members because judicial policy is harmonised between the EU’s member states. Within the EU only Denmark has ‘opted out’ of such harmonisation. So, while the UK could seek a separate agreement replicating Lugano with Denmark, Norway, Iceland and Switzerland, whether such an agreement would be worthwhile is questionable.
What is the most likely outcome?
Despite reports that the UK’s Justice Secretary, Robert Buckland, held “constructive talks” with Didier Reynders, the EU’s Justice Commissioner, at the start of the year, the EU Commission appears unwilling to accede to the UK’s request to deal with this issue separate to the overall negotiations. They are, apparently, currently preparing a detailed analysis for the Lugano countries.
It is likely that the Commission sees the UK’s membership of Lugano as a valuable bargaining chip – perhaps to extract concessions from the UK on migration or agricultural matters as part of the future relationship negotiations.
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This article was produced with additional reporting from Francis Reynolds.