Challenging news for cross-border enforcement – EU Commission opposes UK's application to join the Lugano Convention
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On 8 April 2020, the UK applied to join the Lugano Convention as an independent contracting state. Its application is being considered, and in order to join, all of the existing contracting states (EU, Denmark, and the other Lugano states) must consent. So far Switzerland, Norway and Iceland support the UK's application.
If the UK is permitted to join Lugano, then rather than relying on a patchwork of bi-lateral treaties and local rules to determine where court action should take place and to enforce English judgments in EU and EFTA countries, the more streamlined rules in the Lugano Convention would apply.
According to reports of a meeting after yesterday (12 April 2021), the EU Commission has recommended that the UK should not be allowed to join Lugano. The final decision rests with EU Member States themselves and the European Council, and reports indicate that EU governments are split on the issue.
Litigator and cross-border enforcement expert Sara Chisholm-Batten (Michelmores LLP) commented:
"The news today is a real set-back for UK businesses and individuals. If the UK is accepted into Lugano, it would result in judgments being recognised and enforced across UK and EU / EFTA borders much more swiftly and cost effectively – which would be welcome news for UK businesses trading in those areas – and EU businesses trading in the UK. It would also provide a more predictable and settled framework for individuals who hold assets in those jurisdictions. Without that certainty, cross-border cases become much more difficult to resolve efficiently."
Businesses, individuals and practitioners now await the decision of the EU Member States themselves which is set to be announced in the coming weeks.