This article was first published in Property Week, November 1, 2018
Since the Brexit vote, property investors may want to know whether UK judgments will continue to be enforceable in the courts of EU member states when the UK leaves the EU.
If proceedings are brought in the UK courts against a defaulting tenant (who, for argument’s sake, is based in Spain), will the landlord be able to enforce that judgment in the Spanish courts? The issue does not just affect landlords, but any party wishing to enforce a UK judgment against a counterparty based in the EU.
Under the current regime (the Recast Brussels Regulation), a civil or commercial judgment given in an EU member state is enforceable in all other EU member states. No special procedure or declaration of enforceability is needed and there are few defences available. But preserving the status quo after Brexit will require the agreement of the EU. If no agreement is reached and no alternative regime is put in place, enforcement will become a matter for the domestic law of the state in which the judgment is being enforced. This might be more complicated, but is almost certainly achievable.
There are alternatives to the Brussels Regulation. One possibility is the Lugano Convention, which applies to the enforcement of judgments between EU member states and European Free Trade Association countries, but the UK joining this convention would require the agreement of the other contracting states.
Another alternative is the Hague Choice of Court Convention, an international agreement pursuant to which the courts of contracting states agree to uphold exclusive jurisdiction agreements and to recognise and enforce judgments. The UK participates by virtue of its EU membership, but will cease to do so on its exit. In a paper published in September, the government confirmed its intention to accede to the Hague Convention as an independent contracting state in the event of a no-deal Brexit. The government has since published a draft statutory instrument that would give effect to this, the intention being that this would come into effect on 1 April 2019.
The Hague Convention does not go as far as the Brussels Regulation. Certain prescribed standards must be met. It only applies insofar as the parties have agreed that the courts of a particular country have exclusive jurisdiction in the event of a dispute – and such clauses must therefore be included in contracts. However, the Hague Convention has the advantage that it covers all EU member states (as well as Singapore, Mexico and Montenegro) and the UK can subscribe to it unilaterally without the agreement of the EU.
The hope is the Hague Convention will provide a minimum regime for enforcing UK judgments throughout the EU following Brexit. The government’s recent publications suggest this is likely to be the case.