Overview
First Tuesday Update is our monthly take on current issues in commercial disputes, international arbitration, and judgment enforcement. On June 27, 2024, the United Kingdom ratified the Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (the Convention). The Convention provides a framework for the enforcement of English judgments in the European Union (except Denmark), as well as in Ukraine and, as of October 1, 2024, Uruguay and vice versa. Various other countries, including the United States, Russia and Israel, have signed the Convention, but have yet to ratify it (so it is not in force in those jurisdictions yet). This development is particularly welcome in the post-Brexit context.
Currently, litigants seeking to enforce English judgments in the European Union (EU) often need to navigate local enforcement rules, resulting in extra costs and uncertainty. The Convention, which is due to come into force in England and Wales on July 1, 2025 (Scotland and Northern Ireland having been excluded by declaration), should bring about much-needed consistency and reassurance for litigants before the English courts who enforce judgments in the European Union as part of their international enforcement strategy, as well as parties from European Union states considering enforcement actions in England.
Scope
The Convention applies generally to judgments in civil and commercial matters but is subject to a number of exceptions consistent with accepted standards of international law. For example, the following types of judgment fall outside the Convention's scope:
- Revenue, customers, and administrative matters (Article 1.1).
- Family law, wills and succession matters, insolvency, defamation, privacy, or intellectual property (Article 2.1).
- Arbitration (Article 2.3).
- Interim measures, including freezing orders (Article 3.1(b)).
As is often the case with international enforcement, the court considering the recognition and enforcement of the foreign judgment is not entitled to review the underlying merits of the foreign judgment (Article 4.1).
Further, the foreign judgment "shall be recognized only if it has effect in the State of origin, and shall be enforced only if it is enforceable in the State of origin" (Article 4.3), and "[r]ecognition or enforcement may be postponed or refused" if the foreign judgment "is the subject of review in the state of origin or if the time limit for seeking ordinary review has not expired" (Article 4.4).
Those two Articles give rise to an interesting development in the enforcement of judgments in the European Union in England. Currently, and again owing to Brexit, many EU judgments are now only enforceable in England pursuant to well-established common law principles, which apply where no enforcement treaty exists.
Previously, the English court has at common law been willing in appropriate circumstances to recognize and allow enforcement of a foreign judgment which was not enforceable in its country of origin.[1] Article 4.3 of the Convention would seem to preclude that approach.
Moreover, under the common law, an English court could enforce a final judgment even if it were being reviewed on appeal. However, the wording of Article 4.4 suggests that, in future cases under the Convention, the English court will need to pay closer attention to any ongoing foreign appeal and may postpone, or even refuse, recognition on that basis.
Recognition
The Convention requires contracting parties to recognize and enforce judgments made by the court of another contracting state through its domestic court system (Article 4). It effectively provides a two-step process:
First, the judgment creditor needs to establish jurisdiction under the Convention. Article 5 sets out the somewhat technical, but nevertheless comprehensive, bases on which jurisdiction can be established. In broad summary, these bases, of which there are 13 in total, relate to establishing a requisite connection between the judgment debtor and/or the subject matter of the proceedings with the country from which the foreign judgment originates.
Second, even where jurisdiction is established, the court being asked to recognize and enforce the foreign judgment may refuse to do so in certain (rather limited) circumstances set out at Article 7:
- Where the foreign proceedings were not properly notified to the defendant.
- Where the judgment was obtained by fraud.
- Where the judgment is "manifestly incompatible" with the public policy of the jurisdiction in which recognition and enforcement are sought.
- Where the proceedings were brought contrary to a choice of court agreement.
- Where the judgment is inconsistent with a previous judgment between the same parties in the jurisdiction where recognition and enforcement are sought.
- Where the judgment is inconsistent with a previous judgment in another Convention state between the same parties on the same subject matter, provided that judgment fulfills the conditions necessary for its recognition in the jurisdiction in which its recognition is sought.
Process for Recognition and Enforcement
The procedure for recognizing and enforcing the foreign judgment will ultimately be governed by the law of the state in which recognition and enforcement are sought. The judgment creditor will also need to provide a certified copy of the judgment, as well as any other documents necessary to establish that the judgment is enforceable in the jurisdiction from which the foreign judgment originates (Articles 12 and 13).
Implications
Even though the pre-Brexit regime applies to proceedings commenced prior to December 31, 2020, any proceedings commenced after that date have faced an unwelcome array of uncertainties when it comes to enforcement in the European Union (and, as noted above, vice versa). Although the 2005 Hague Convention on Choice of Court Agreements has assisted to a degree, it applies only to judgments where the court had been specified by an exclusive jurisdiction clause and is therefore of narrower application.
This Convention likely mitigates many of those uncertainties by providing an agreed and mutually enforceable framework, albeit one which will only apply to proceedings commenced after July 1, 2025. Depending on the circumstances, including any applicable limitations periods, in some situations, it may be advantageous to file a proceeding after July 1, 2025, to be able to rely on the Convention.
Although it has yet to receive a more widespread adoption, the Convention has the potential to become an increasingly useful enforcement instrument if other countries ratify it, particularly with respect to countries with which the United Kingdom does not have an enforcement treaty, including the United States.
[1] See Invest Bank PSC v El-Husseini & Ors [2023] EWHC 2302 (Comm).
