Cross-border enforcement

of judgments post-Brexit

Cross-border enforcement

In international business transactions as in other areas, companies are often obliged to enforce their claims in court. In cross-border disputes, the enforcement of a court decision abroad often leads to increased costs. 

In principle, a judgment is only valid in the nation in which it was made. International agreements or other special arrangements are required in order to be able to enforce it in another nation. For EU Member States, the cross-border enforcement of court decisions is therefore the subject of various regulations, in particular of Regulation 1215/2012, which (also) regulates the recognition and enforcement of decisions in civil and commercial matters. Within its remit, judicial decisions are enforceable without the need for further proceedings in another Member State. Only in a few exceptional cases may this be refused. 

Under the Regulation, which thus far has also applied to the United Kingdom, the question of jurisdiction can be settled by agreement between the parties, but even without such an agreement the regulation is applicable, for example, to actions for damages or infringements of intellectual property rights. The Regulation thus provides the basis for an uncomplicated enforcement of court decisions within the EU in many economically relevant legal areas. Although the British officially left the EU on 31.1.2020, the Union and the UK agreed on a transitional period in the so-called exit agreement, during which EU law, including the Regulation, is still binding for the UK. This transitional period now ends on 31.12.2020. Thereafter, judgments from Member States can only be enforced in the UK according to the Regulation if the underlying judicial proceedings were started before 31.12.2020. The same applies to the enforcement of UK decisions in the Member States. 

From 1.1.2021 the Hague Convention on Choice of Court Agreements between the UK and EU Member States will apply. This international treaty also governs the recognition and enforcement of certain (!) judgments in civil and commercial matters between the EU and the UK. However, the Convention – unlike the Regulation – applies only if the parties to the dispute have concluded an exclusive choice of court agreement. In addition, the UK continues to be governed by the New York Convention on Recognition and Enforcement of Foreign Arbitral Awards, which ensures the enforcement of decisions of commercial arbitration courts in the UK. The enforcement in the UK of (arbitral) court decisions by Member States based on contractual dispute settlement clauses is thus assured. Without underlying party agreements, however, there will be no protection under international law for enforcement after 31.12.2020 for the time being. 

When concluding contracts with UK business partners, an exclusive choice of court agreement or an arbitration clause should therefore be included to avoid unnecessary difficulties in enforcing legitimate claims. For old contracts, it is also advisable to subsequently include a corresponding agreement between the parties. The use of legal assistance is recommended, as the correct formulation of an appropriate clause is necessary to avoid problems and costs. 

In the long term, it is hoped that the unsatisfactory legal situation will be corrected under international law, for example by acceding to the Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters published in July 2019. The EU is currently evaluating this, but so far, no Member State has ratified the Convention.

Authors:

Dr. MICHAEL KOMUCZKY, Attorney-at-law at LANSKY, GANZGER + partner
Mag. VALENTIN NEUSER, Managing Partner, Head of German Desk and Mediator at LANSKY, GANZGER + partner

My documents

Add page

There are currently no documents in your basket.