On 4 May 2021 the European Commission published its recommendation to the EU that the UK’s application to accede to the 2007 Lugano Convention should be rejected, on the basis that the UK is now “a third country without a special link to the internal market”.
What is the 2007 Lugano Convention?
The Convention covers jurisdiction, and the recognition and enforcement of judgments in civil and commercial matters, between its contracting states. It was concluded between the European Union, Denmark in its own right and also Switzerland, Norway and Iceland.
How did Brexit affect the UK’s position?
The UK was previously a member of the Lugano Convention by dint of its membership of the EU. When the UK left the EU, it lost, in turn, its membership of the Lugano Convention. The unanimous agreement of the contracting parties is required for another state to accede to the Convention. Therefore, on 8 April 2020, the United Kingdom applied to accede to the 2007 Lugano Convention in its own right. The EU Commission has now published its recommended rejection of the UK’s application.
The European Commission’s decision
The European Commission decision is based on two principal points:
(i) the nature and purpose of the Lugano Convention; and
(ii) the existing framework of judicial co-operation with “third countries”, of which the UK is now one.
The nature and purpose of the Lugano Convention
The European Commission has stated that the purpose of the Lugano Convention is to provide “a common area of justice” for states with close connections to the EU’s internal market. It has commented that the current contracting parties all “participate, at least partly, in the EU’s internal market, comprising the free movement of goods, services, capital and persons.” As the UK does not have any degree of “economic interconnection” with the other contracting parties, the European Commission’s view is that the Lugano Convention is not the appropriate framework for judicial cooperation as regards the UK.
The existing framework of judicial co-operation with third countries
The EU Commission has commented that there is already an existing framework of judicial co-operation with third countries, such as the UK, by means of the 2005 Hague Convention. This, the Commission states, is a more appropriate forum than the Lugano Convention for such co-operation. The reality is that the Hague Convention is not as extensive as the Lugano Convention in certian respects.
What happens next?
The final decision rests with the European Parliament and Council. However, in order to be approved, the UK's accession would need unanimous agreement from all contracting parties, which may now be less likely given the Commission’s recommendation – despite statements of support of the UK’s accession having previously been received from Iceland, Norway, and Switzerland.
Impact of this decision
Accession to the Lugano Convention would assist in simplifying civil judicial co-operation between the UK and the EU. Whilst the 2005 Hague Convention does provide a regime regulating jurisdiction and enforcement of judgments, it does not apply to disputes concerning an agreement with a non-exclusive or asymmetric jurisdiction clause. The position in relation to jurisdiction and enforcement, therefore, remains less certain than it was pre-Brexit.
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In view of the above, the Commission takes the view that the European Union should not give its consent to the accession of the United Kingdom to the 2007 Lugano Convention. For the European Union, the Lugano Convention is a flanking measure of the internal market and relates to the EU-EFTA/EEA context.