Now that the UK Government and the EU have set out (at least in part) their respective positions in relation to enforcement of judgments in a No Deal Scenario, we have a much better idea of what potential mechanisms of enforcement are envisaged post-Brexit. This note sets out the position under the current regime and summarises the likely mechanisms of enforcement envisaged in the event of a No Deal Scenario.
EU Member States currently have an effective regime whereby a judgment creditor in one Member State can enforce a judgment in another Member State pursuant to Regulation (EU) No. 1215/2012 (the "Recast Brussels Regulation"). The regime under the Recast Brussels Regulation represents arguably the most comprehensive and sophisticated multilateral system of civil judicial co-operation in the world.
If the UK leaves the EU with no form of agreement as to the future relationship (a so called "No Deal Scenario"), there would be uncertainty over whether and how the regime under Recast Brussels Regulation would apply to the UK. In order to mitigate this uncertainty, the UK Parliament has passed secondary legislation clarifying how the English courts will enforce foreign judgments following exit day (currently 11pm on 1 November 2019). The UK Government has also deposited its instrument of accession to the Hague Convention on Choice of Court Agreements (the "Hague Convention") at the Hague Depository, triggering the mechanism whereby the UK could independently accede to the Hague Convention. The Hague Convention requires the courts of contracting states to give effect to exclusive jurisdiction clauses and to enforce any judgments resulting from the same. Similarly, the EU has published a Notice to Stakeholders and a Question and Answer document (the "EU's Q&A") which aim to clarify the EU's position on how English judgments will be enforced in the courts of the remaining EU States (the "EU27") in a No Deal Scenario.
Although many of these proposed changes necessitate legislative amendment, the actual mechanisms of enforcement in the UK and EU27 Courts are already developed and are well understood by practitioners and courts, not least because they have continued to apply to cross-border matters where the Brussels regime does not apply (for example, the enforcement of a judgment from a New York or Japanese court). Nevertheless, these changes will introduce certain procedural and substantive steps that litigants will have to consider in order to ensure that they can continue to enforce judgments in their favour efficiently.
Current Position under the Recast Brussels Regulation
Enforcement of judgments of the courts of one EU Member State in the court of another EU Member State is governed by the Recast Brussels Regulation. The Recast Brussels Regulation applies to "civil and commercial matters" and provides that:
"A judgment given in a Member State which is enforceable in that Member State shall be enforceable in the other Member State without any declaration of enforceability being required." (Article 39)
There is a wide definition of 'judgment' under the Recast Brussels Regulation. As well as common money judgments (including costs orders), the Recast Brussels Regulation covers the enforcement of non-money judgments such as injunctions, interim orders such as freezing orders, and in certain instances, default judgments. There are a number of bars to enforcement under the Recast Brussels Regulation, although the grounds are extremely limited, consistent with the EU's overarching policy to make judgments easily enforceable in Member States.
To enforce a judgment issued by the court of a Member State, a judgment creditor must:
- obtain a certificate from the court that issued the underlying judgment, detailing its substance and certifying that it is enforceable; and
- serve the certificate and judgment on the judgment debtor and provide copies to the competent enforcement authority (and a translation, if required).
Following this, a judgment creditor can apply for the full range of enforcement orders available in the relevant Member State. For example, in the English courts, a judgment creditor could: apply to take control of the judgment debtor's assets; apply for a charging order; apply for a third party debt order; apply for an attachment of earnings order or apply for a receivership to be imposed.
Post-Brexit - Enforcement of an EU27 judgment in the English courts
The UK Parliament, as part of the SI Legislative Storm, recently passed the Civil Jurisdiction and Judgments (Amendment) (EU Exit) Regulations 2019 (the "UK CJJ Regulations"). In summary, the UK CJJ Regulations state that:
- the Recast Brussels Regulation will be repealed in the UK. As a consequence, after exit day, it will not be possible to enforce an EU27 judgment in the English courts under the Recast Brussels Regulation. The reasoning for this amendment is that the Recast Brussels Regulation relies on reciprocity; the courts of Member State A will enforce judgments of Member State B because the courts of Member State B will enforce judgments Member State A. Following Brexit, the UK will no longer be an EU Member State, and if it leaves the EU under a No Deal Scenario, such reciprocity will fall away;
- however, if you have obtained judgment in an EU27 court on or before exit day, then you can enforce that judgment after exit day in the English courts under the Recast Brussels Regulation;
- further, if the EU27 court was seised of the proceedings on or before exit day, and you subsequently obtain judgment, then the Recast Brussels Regulation will apply to enforcement proceedings in the English courts for that judgment (paragraph (b) and (c) are defined in this note as the "UK Saving Provisions").
The UK Saving Provisions ensure that a judgment creditor looking to enforce an EU27 judgment in the English courts does not have to rush to do so prior to exit day to ensure that it can continue to benefit from the Recast Brussels Regulation regime. Rather, a potential litigant need simply initiate proceedings in EU27 courts prior to exit day for the Recast Brussels Regulation to apply in any subsequent English enforcement proceedings. Given the length of time that litigation can take in some EU27 states, this could result in the Recast Brussels Regulation still being applied by the English courts for a number of years after exit day.
If the relevant EU27 court is not seised of proceedings prior to exit day, then in order to enforce the resulting judgment in the English court, a judgment creditor will have to rely on the domestic law of the English courts. The domestic provisions in the English courts differ depending on whether or not the judgment is covered by the Hague Convention.
Application of the Hague Convention to an EU27 judgment
The Hague Convention states that, where there is an exclusive jurisdiction agreement (an "EJA") between the parties to the dispute, all Contracting States (after 1 November 2019: the EU27; the UK; Montenegro; Mexico and Singapore) are required to enforce any judgment made by the specified court. The Hague Convention further sets out the documents that a judgment creditor must produce in order for a judgment to be enforced in a Contracting State and the limited set of grounds on which recognition and enforcement can be refused.
The Hague Convention, however, is narrower in scope than the Recast Brussels Regulation. In order to determine whether the Hague Convention applies, it is necessary to ask the following questions:
- Is there an underlying EJA?
The Hague Convention applies only where there is a pre-existing EJA in place between the litigants.
- When was the EJA entered into?
If the EJA was entered into prior to 1 October 2015, the Hague Convention does not apply.
Further, there is uncertainty as to whether the Hague Convention will apply where the EJA was entered into prior to exit day, at which time the UK was a Contracting State only by virtue of it being an EU Member State. In addition, there could be a coverage gap between exit day and the date on which the can UK in fact accedes to the Hague Convention. To address these issues, the UK has passed the Civil Jurisdiction and Judgments (Hague Convention on Choice of Court Agreements 2005) (EU Exit) Regulations 2018 (the "Hague Convention Regulations"), which stipulate that, if an EJA is entered into between exit day and the date of accession, the Hague Convention shall apply in the English courts, as if the UK had remained a Contracting State without interruption.
One scenario in which there is uncertainty under the Hague Convention Regulations and the UK CJJ Regulations, is where an EJA in favour of an EU27 court is entered into prior to exit day, but the EU27 court is not seised of proceedings until after exit day. In this situation, it is currently unclear whether the Hague Convention will apply or not.
- Are you trying to enforce a money judgment or a final injunction?
The Hague Convention only applies if you are trying to enforce a money judgment or a final injunction. Therefore, it does not cover interim protective measures such as freezing orders or interim orders.
- Is it an excluded matter?
The Hague Convention lists specific substantive exclusions to its scope, including, insolvency, arbitration, consumer, employment and antitrust matters, as well as other niche matters.
If the EU27 judgment satisfies the above criteria (it is a "Hague Convention Judgment"), the CPR sets out a three stage procedure that should be followed in order to get a judgment enforced.
First, the judgment creditor applies without notice for the registration of the judgment. Provided all formalities are complied with, the court must register it without delay. Second, the judgment creditor must serve the registration order on the judgment debtor. If the judgment debtor considers he has grounds, the judgment debtor may appeal to the High Court under CPR 74.8 against the granting of registration. Third, once the judgment has been registered and served on the judgment debtor, the judgment creditor can then apply for an enforcement order (for examples, see above).
This procedure is more extensive than the procedure for enforcement under the Recast Brussels Regulation, as it requires an application to have the judgment registered; however, the procedure places the onus on the judgment debtor to take positive action to stop the judgment becoming enforceable. The judgment debtor is not entitled to make any submissions on the application for registration (only being able to appeal against the registration), and the court is obliged to register the judgment if the formalities have been complied with.
If the EU27 judgment is not a Hague Convention Judgment, then the judgment creditor would have to institute fresh legal proceedings in the form of a debt claim. The foreign judgment can be adduced as evidence in support of such an action, although it will need to be:
- final and conclusive;
- for a sum of money; and
- on the merits.
This means that foreign injunctions or interim orders cannot be enforced under English domestic law. Further, the requirement that a judgment be 'on the merits' could provide an additional obstacle for enforcement of an EU27 judgment. The English courts impose a further requirement that the original judgment court must have had jurisdiction according to the rules which English law applies in such cases. However, the common law and statutory rules of England and Wales have been developed over centuries and are well understood by practitioners and courts alike, and have continued to apply to international cross-border matters where the Recast Brussels Regulation does not apply.
In short, whether you are trying to enforce, after exit day, a judgment covered by the UK Saving Provisions, a Hague Convention Judgment, or a judgment not covered by the Hague Convention, there are effective and efficient methods by which a judgment creditor can enforce the EU27 judgment in the English courts. A No Deal Scenario may give rise to additional procedural steps for certain types of judgments but these are by no means insurmountable.
Post-Brexit - Enforcement of an English judgment in an EU27 court
On 18 January 2019, the EU published a Notice to Stakeholders (the "EU Notice"). The EU Notice has no legal force but nevertheless clarifies the EU's position on the issue of civil judicial cooperation. The EU Notice takes a different stance to the UK CJJ Regulations, in that it indicates that the EU27 courts will not apply the Recast Brussels Regulation to:
- any English judgment obtained prior to exit day;
- any proceedings pending before exit day, including an enforcement action; or
- proceedings instituted after exit day.
This would mean that, even if you have commenced (but not concluded) enforcement action in an EU27 state pre-Brexit, the Recast Brussels Regulation will no longer apply to that, and it may be necessary to recommence enforcement proceedings in the EU27 state pursuant to its domestic enforcement provisions (such as the exequatur process in civilian legal systems). This position was reiterated in the EU's Q&A.
This difference leads to a degree of asymmetry between the approaches of the UK Government and the EU27. The UK Saving Provisions provide for more extensive grandfathering provisions, and, as a result, more extensive application of the Recast Brussels Regulation to EU27 judgments post-Brexit than the EU27 has afforded to English judgments.
Application of the Hague Convention to an English judgment
Given this, the first question to ask when considering enforcement of an English judgment in an EU27 court post-Brexit is whether it is a Hague Convention Judgment. This involves considering the four questions highlighted above.
Further, the EU's Q&A states that "according to Article 16(1) of the Convention, it will only apply to exclusive choice of court agreements concluded after its entry into force for the UK i.e. after the UK has become a party to the Convention." Although this is not entirely clear, it seems to suggest that the Commission's view is that the Hague Convention would not apply to an EJA in favour of the UK courts concluded prior to 1 November 2019 on the basis that, at that point, the UK was a Contracting State only by virtue of it being an EU Member State, and the Hague Convention only entered into force in the UK in its own right on 1 November 2019. In other words, the protection afforded to EJAs entered into prior to 1 November 2019 could be lost when the UK leaves the EU and this protection may not be revived by the UK's independent accession to the Hague Convention. The Commission's view, although instructive, is not conclusive of what EU27 courts, or the CJEU, may decide.
If you are enforcing a Hague Convention Judgment in the EU27 after exit day, you will need to look at the domestic provisions of the EU27 State to see whether that Member State has implemented an expedited or alternative procedure for such judgments. A judgment creditor seeking to enforce an English judgment not covered by the Hague Convention in an EU27 court would have to rely on the domestic provisions in the EU27 State relating to such judgments.
Domestic law in relation to the enforcement of foreign judgments is well developed in each of the EU27. Given this, and the long-standing existence of cooperation between the courts of the EU27 and the UK, it is unlikely that the EU27 courts will restrict the enforcement of an English judgment post-Brexit. Nevertheless, as is the case before the English Courts, litigants looking to enforce an English judgment in the EU27 will likely be required to initiate fresh proceedings in that jurisdiction, and there will undoubtedly be additional, jurisdiction-specific, procedural steps that will need to be taken. For example, in many civil law legal systems, a declaration of enforceability must be obtained through exequatur proceedings before an enforcement action can be brought (as is currently the case when enforcing judgments from non-EU states such as the US or Japan).
Following the publication of the UK CJJ Regulations, the Hague Convention Regulations and the EU Notice, we are now somewhat closer to understanding the nature of the cross-border judicial co-operation that will likely exist in the event of a No Deal Scenario. Nevertheless, further clarity is still required on the application of the Hague Convention in the courts of both the UK and the EU27 post-Brexit where an EJA has been entered into prior to exit day.
The general systems of enforcement in the UK and EU27 Courts that will exist in a No Deal Scenario are already in place and are well understood by practitioners and courts in those jurisdictions, such that enforcement of judgments in those jurisdictions should continue to be fairly quick and easy. However, there will likely be further procedural steps required to enforce such a judgment, which will undoubtedly make the process more time-consuming and expensive than is currently the case under the Recast Brussels Regulation. Therefore, in a No Deal Scenario, parties seeking to enforce a judgment will need to consider specific local law advice on the mechanisms of enforcement in the relevant UK and EU27 state in order to determine the nature and detail of the procedural steps that will likely exist.