On 23 November 2023, the UK Government published its response to the consultation paper on the Hague Convention of 2 July 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (see the previous post related to the consultation and the groundwork of the process here The Ball is Rolling: The UK to ratify the Hague Judgments Convention? – The Institute of International Shipping & Trade Law (IISTL) Blog). Having considered the responses received, the Government has concluded that it is the right time for the UK to join Hague 2019 and will seek to do so as soon as practicable. Indeed, it is clear from the paper that a total of 39 responses were received from across the UK’s legal sector, both practitioners and law firms as well as academics, and all of the consultees supported the UK’s accession to the HJC.
The Convention has been in force since 1 September 2023 as the only global instrument containing uniform rules for the mutual recognition and enforcement of judgments in civil and commercial disputes for the EU, Ukraine and Uruguay as the existing Contracting States. Joining the Convention will indeed ensure greater legal certainty and promote the UK’s reputation as a preferred forum for resolving international civil and commercial cases. Indeed, it will contribute to a swift resolution of disputes by shortening expenses and time frames for businesses and consumers because of the facilitated recognition and enforcement of the final decisions. The latter will in turn boost commercial parties’ confidence while operating across borders with increased clarity about the effectiveness of their judgments.
The Government’s response further highlighted the fact that judgments from non-exclusive choice of court agreements, which are excluded from the scope of the 2005 Hague Convention on Choice of Court Agreements (HCCCA), are enforceable under Hague 2019, which will likely increase the attractiveness of the UK financial services industry. Having ratified the HCCCA, the UK has guaranteed the effectiveness of the English exclusive jurisdiction clauses in all other Hague Contracting States and vice versa. In fact, the HJC complements the HCCCA with the same objectives and further covers judgments given by non-exclusively designated courts; therefore, joining the HJC will enhance party autonomy and ensure the effectiveness of an entire range of choice of court agreements.
Additionally, becoming a Contracting State to the HJC will significantly contribute to legal certainty in the post-Brexit era together with its sister instrument HCCCA. The relevant instruments will get reciprocally given effect in the UK and EU. Further, given the fact that the territorial scope of the Convention is expanding having Israel, Russia, Costa Rica, North Macedonia and the US already signed so far, joining the treaty will enhance the global enforceability of judgments.
In addition to the potential benefits of the HJC, the Government is also well aware of the downsides of the mechanism. In this context, the Government’s response underlines several concerns that have been raised by the consultees. These include the risks regarding the UK courts’ potential obligation to recognise and enforce foreign judgments under the HJC in the absence of an obligation under the common law or existing arrangements. Further, potential issues related to procedural fairness and rule of law in the origin country have also been mentioned. Yet, the Government considers that there are adequate safeguards such as making declarations under Article 29 to prevent the application of the Convention with regard to a particular Contracting State at the time of ratification of that state. Additionally, the recognition and enforcement of judgments can be refused if one of the grounds in Article 7 can be established, including if certain procedural fairness requirements have not been met and where recognition or enforcement would be manifestly incompatible with the public policy of the UK. Moreover, the Government is in the view that while Article 5 gives a list of indirect jurisdiction grounds and wider possibilities for recognition and enforcement in some circumstances, it also requires clear thresholds that parties must meet.
The Government also mentions the concerns raised regarding the exclusions and the more limited scope of the HJC compared to the Lugano Convention for which the UK applied to join. Yet, the potential merits of the HJC outweigh any possible downsides and joining the latter does not prevent the UK’s future reaccession to the Lugano regime. Another point that is noted by the Government is that the HJC does not change or remove existing recognition and enforcement mechanisms provided by domestic law in the UK and other Contracting States, on which parties can continue to rely for the recognition and enforcement of cases not covered by the treaty.
Regarding possible declarations under the relevant provisions of the HJC, the Government supports the respondents’ views about the potential of restricting the Convention’s application and likely reciprocal actions from other Contracting States which would further limit the scope of the Convention. In line with the consultees’ views, the Government thinks that the UK should not make any declarations at this time (nor any declaration in regard to insurance matters) but it will keep the questions of declarations under review as it proceeds to signature and implementation, and in future as the Convention comes into force between the UK and current and future Contracting States.
The Government concluded that the HJC should extend to all of the UK jurisdictions to ensure consistency and ensure that all jurisdictions can benefit from the advantages of the Convention. Also as observed in the respondents’ comments, the Government is planning to use a registration model for implementing the mechanism same as what is used for the implementation of the HCCCA 2005, which would require foreign judgments to be registered prior to their enforcement in the UK. It means that parties seeking to have a foreign judgment recognised and enforced in the UK under the HJC would need to apply to the court, setting out the applicable indirect jurisdiction ground, amongst other things, and provide the necessary evidence. Parties objecting to the recognition and enforcement of the foreign judgment would then have an opportunity to challenge the registration before enforcement takes place, by way of appeal against or setting aside of the registration.
The Government will further consider the details of this implementation model particularly in relation with the challenges highlighted by respondents for the indirect jurisdiction aspects of the procedures. In line with this, the suggestion to amend the jurisdiction grounds currently found in Practice Direction 6B and adjusting them to Article 5 of the HJC, will be passed onto the Master of the Rolls and the Civil Procedure Rule Committee for consideration. Moreover, since this might become a devolved matter in respect of Scotland and Northern Ireland, Government officials will continue to work closely with their counterparts in the Scottish Government and in Northern Ireland to ensure implementing frameworks are in place in all 3 jurisdictions ahead of ratification of the Convention. Overall, the Government will work with the Crown Dependencies and the Overseas Territories to determine if the Convention should extend to these territories.
The Government has further considered the concerns in relation to signature by Russia and considers that the UK should sign the Convention with the understanding that a future notification in relation to the Russian Federation under Article 29 might be available to prevent the Convention applying between the UK and Russia, should there be any development in the latter’s ratification of the treaty.
In summary, based on all the responses and comments received during the Consultation process, the Government estimates there will be a positive impact on businesses that operate across borders, because they will have a predictable, more certain and uniform way to enforce judgments that they might need to seek to resolve disputes. The Government also estimates that there will be a positive impact on the litigation sector. The Government will undertake further work to quantify the impact and issue guidance when implementing the Convention.
The Government is planning to lay the Convention in Parliament soon ahead of ratification and to make sure the implementing legislation is in place for the three jurisdictions ahead of the accession. Once ratified, the HJC will be implemented in domestic law mainly using powers in the Private International Law (Implementation of Agreements) Act 2020 as well as via rules of court in all 3 jurisdictions of the UK subject to appropriate parliamentary scrutiny. As provided in Articles 28 and 29 of the HJC, the Convention would enter into force for the UK 12 months after the date it deposits its instrument of ratification.