UK post-Brexit Lugano accession thrown into doubt

This blog is by Spencer Turner of 12 King’s Bench Walk.

The UK Government has outlined its intention to accede to the Lugano Convention post-Brexit. Accession to the Convention would preserve the essentials of the current regime, in that it would provide for a reciprocal arrangement under which English and other European courts would apply a common set of jurisdictional rules. Some of the benefits of Brussels I (Recast) would be lost (we may see the return of the ‘Italian torpedo’ because the Lugano Convention does not accord primacy to exclusive jurisdiction agreements, for example) but accession to the Lugano Convention would provide a degree of legal certainty, predictability of outcome, and definite relief for practitioners and parties.

Earlier in January 2020, Norway, Iceland and Switzerland sounded their support for the UK’s plan to join the Lugano Convention and, on 8 April 2020, the UK submitted its formal application to accede to the Convention. The obvious potential speed bump for the UK is that in order to accede to the Convention there will have to be unanimous consent of all the other contracting parties. Easier said than done.

An exclusive in the Financial Times published on 27 April 2020 discussed comments made by diplomats who have been privy to the advice provided by the Commission to Member States in relation to the UK’s application to join the Convention:

Following the formal request to join, EU diplomats said the European Commission had advised the bloc’s member states earlier this month that a quick decision was “not in the EU’s interest”.

The diplomats said that commission raised the issue during a meeting with EU member-state officials on April 17, saying that granting the request would be a boon for Britain’s legal sector.

The report suggested that the frosty reception received following the UK’s application was, in part, because the current signatories are all members of, or participate in, the single market. The UK has made it clear that it will leave the single market when the transition period ends. This raises the question of whether ‘the boon’ for Britain’s legal system will contribute to any hesitation by either the Commission or Member States to allow the UK to accede to the Lugano Convention.

Negotiations continue between the UK and the EU. If the UK cannot accede to the Lugano Convention, the Hague Convention on Choice of Court Agreements may be the next port of call for the UK. Otherwise, jurisdiction and enforcement issues could fall to be dealt with largely by the local rules of each country.