The Recognition and Enforcement of Judgments (2019 Hague Convention etc) Regulations 2024

Introduction

On 12 January 2024, the UK signed the Hague Convention of 2 July 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (the Hague Convention 2019). Acceding to the Hague Convention 2019 will assist and simplify the process by which parties can enforce English judgments in other contracting states, which, importantly, includes EU member states.

The UK must ratify the Hague Convention 2019, which will then enter into force 12 months after it has been ratified. In anticipation of this, the Recognition and Enforcement of Judgments (2019 Hague Convention etc.) Regulations 2024, SI 2024/713 (the Regulations) have been introduced to implement the Hague Convention 2019 in the UK. To this end, the Regulations amend the Civil Jurisdiction and Judgments Act 1982. They also make provision relating to the registration of judgments from other contracting states.

What does the Hague Convention 2019 look to achieve?

The UK’s exit from the EU meant that there was no overarching framework under which parties could enforce English judgments in a foreign state, or vice versa, aside from the Hague Convention on Choice of Court Agreements (the Hague Convention 2005). The Hague Convention 2005 is limited in scope, however, as it can only be used to enforce English judgments in a foreign court where there is a qualifying exclusive jurisdiction clause in favour of the English courts present in the contractual documentation under which the dispute arises. In the absence of such a clause, enforcement of an English judgment is subject to the national laws of the relevant foreign state and can be a costly and time-consuming process, often with unpredictable outcomes. Given that many finance documents contain asymmetrical jurisdictional clauses, the Hague Convention 2005 has had limited impact from a banking and restructuring perspective and is regarded as having been an inadequate substitute for the EU Recast Judgments (Brussels) Regulation and the Lugano Convention 2007, which had applied whilst the UK was a member of the EU.

The Hague Convention 2019 is set to fill the gaps so far as the UK is concerned, and provides a reciprocal recognition framework to facilitate and enforce judgments handed down by courts of contracting states (including in the EU).

What judgments qualify for recognition under the Hague Convention 2019?

The Hague Convention 2019 applies to judgments on the merits given in civil and commercial matters, as well as decisions on the costs of proceedings.

For a judgment to be eligible for recognition and enforcement, one of the ‘bases’ listed in Article 5 of the Hague Convention 2019 must be met. These include, amongst other things: (i) the person against whom recognition or enforcement is sought being habitually resident in the state of origin at the time that person became a party to the proceedings in the court of origin, (ii) the defendant expressly consenting to the jurisdiction of the court of origin, and (iii)  the defendant having argued on the merits before the court of origin, without contesting jurisdiction, within the timeframe provided in the law of the state of origin.

Despite being broader in scope than the Hague Convention 2005, certain matters remain excluded from the 2019 Hague Convention, including an insolvency exclusion. Intellectual property, anti-trust matters, and arbitration proceedings are also excluded. Interim measures, such as interim damages in personal injury cases, also are not capable of recognition or enforcement under the Hague Convention 2019.

From a restructuring perspective, schemes of arrangement under Part 26 of the Companies Act 2006 may well fall within the scope of the Hague Contention 2019, potentially as may Part 26A restructuring plans. This will depend on whether the courts of the relevant contracting state consider the scheme to be excluded by the insolvency carve-out, which includes composition, resolution of financial institutions, and analogous matters (Article 2(1)(e)). Accession therefore may provide a further gateway for the recognition of outbound UK restructuring proceedings in EU Member States.

Article 7 lists specific grounds for refusal of recognition and enforcement of foreign judgments, which includes circumstances where the judgment was obtained by fraud, where there is an inconsistent judgment in a dispute between the same parties on the same subject-matter, and where there has been a failure to notify the defendant of the claim in sufficient time or in a suitably appropriate manner.

Our thoughts

Assuming the Hague Convention 2019 is ratified, it should facilitate the recognition and enforcement of English civil and commercial judgments in EU Member States. Ukraine and Uruguay have also ratified the convention, meaning the reciprocal framework also applies to those states. Several other countries have signed, but not ratified, the convention, including the USA. As more states sign and ratify the Hague Convention 2019, its geographical reach and overall impact will increase.

Its relevance to restructuring matters - and particularly to restructuring plans - may well be tested in the courts. The High Court confirmed in Re gategroup Guarantee Limited [2021] EWHC 304 (Ch) that Part 26A restructuring plans fall within the insolvency proceedings carve out in the Lugano Convention, and are therefore outside of its scope. As the Hague Convention 2005 and the Hague Convention 2019 are based on similar principles, it remains to be seen whether restructuring plans will benefit from the UK’s accession to the Convention.