Update on Lugano Convention

As part of its plans in the area of judicial cooperation in civil matters post-Brexit, the UK applied to join the Lugano Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, to which it was a signatory by virtue of its EU membership. The UK’s application is still pending.

Over the last couple of weeks, there has been mixed reporting regarding the prospects of the application. In order for the UK to be admitted, there has to be unanimous support from existing contracting parties. Since the support of the EFTA states (Iceland, Norway and Switzerland) has been known for some time, the outstanding question remains the position of the EU. The European Commission is said to be opposed to the UK’s application on the basis that the Lugano Convention operates only in the EU/EFTA context, which now excludes the UK.

It would be prudent for commercial parties wishing to litigate in the English courts to take this uncertainty into account when transacting across borders. The safest course to take at this time would be to agree an exclusive jurisdiction clause and avoid non-exclusive and assymetric jurisdiction clauses. Exclusive jurisdiction clauses agreed on or after 1 January 2021 ought to fall within the scope of the 2005 Hague Convention on Choice of Court Agreements, such that they will be respected by European courts and any English judgment then enforceable throughout the EU. See my colleague Anna Cook’s drafting tips for jurisdiction clauses here.