European Commission formally advises EU to block UK Lugano accession

We previously blogged on reports that the UK’s bid to accede to the Lugano Convention had been opposed by the European Commission at a closed-door meeting with EU diplomats.

The Commission has now released its “Assessment on the application of the United Kingdom of Great Britain and Northern Ireland to accede to the 2007 Lugano Convention”, available here. It has formally advised the EU not to allow the UK to accede.

The reasoning is based on the existing Contracting Parties being participants, “at least partly, in the EU’s internal market, comprising the free movement of goods, services, capital and persons.” In summary:

For the European Union, the Lugano Convention is a flanking measure of the internal market and relates to the EU-EFTA/EEA context. In relation to all other third countries the consistent policy of the European Union is to promote cooperation within the framework of the multilateral Hague Conventions. The United Kingdom is a third country without a special link to the internal market. Therefore, there is no reason for the European Union to depart from its general approach in relation to the United Kingdom.

The Commission pointedly noted that the possible accession of the UK

is neither mentioned in the Political Declaration, nor in any other joint EU/UK document on the framework of the future relationship. Nor is it mentioned in the Trade and Cooperation Agreement between the European Union and the European Atomic Energy Community, of the one part, and the United Kingdom, of the other part, which was agreed on 24 December 2020 and is provisionally applied since 1 January 2021.

If the UK’s intention were always to accede (which we assume it was), then the failure to deal with this during the negotiation process now seems a glaring omission. The competitive advantage offered to cross-border law firms still operating on the UK’s doorstep under the blankets of Brussels I (Recast) and Lugano Convention is clear.

There is also an interestingly phrased comment at the end of the note:

Stakeholders concerned, and in particular practitioners engaged in cross-border contractual matters involving the European Union, should take this into account when making a choice of international jurisdiction.

This comment was referring specifically to contractual matters now governed by the Hague Conventions.

But the explicit instruction to “stakeholders” to take into account the new legal landscape when making their “choice of international jurisdiction” might also go some way to explaining the reticence to allow the UK – now a third country and competitor to the EU’s legal market – back into the Lugano club, with all the benefits that it includes.