Will the UK join the 2007 Lugano Agreement?
In the past few days, conflicting reports have emerged about whether the European Union will accept the UK’s application to join the 2007 Lugano Agreement, the UK’s preferred jurisdiction and enforcement system with post-Brexit EU member states. This post briefly describes what the 2007 Lugano Agreement is and why the UK wants to join it, and provides an update of the accession process.
Previous articles in this series discuss in more detail the 2007 Lugano Agreement (Part 1: Here(Explain the rules now governing jurisdiction and enforcement of judgments in the UK after the Brexit transition period ends on December 31, 2020.) Parts 2-4: HereAnd the Here, And the Here).
What is the 2007 Lugano Agreement?
The 2007 Lugano Agreement regulates jurisdiction and enforcement of judgments between the European Union and the three member states of the European Free Trade Association (EFTA) – Switzerland, Iceland and Norway (but not Liechtenstein). Brussels Regulation for Reproduction (Regulation 1215/2012) (Restructuring of Brussels), which applies to jurisdiction and enforcement of judgments between the UK and EU member states prior to the end of the Brexit transition period on December 31, 2020, tightening redundancy The UK was a former member of the Lugano for the year 2007 through its membership in the European Union.
Why does the UK want to join?
Accession to the 2007 Lugano Agreement will allow direct cross-border enforcement of judgments between the UK and EU member states and provide legal certainty and predictability to parties by allowing them to determine which courts they can bring cases before.
From the UK’s point of view, it is also important that the 2007 Lugano Agreement includes a relatively weak obligation to “pay the account due” under the ECJ case law which may allow for further disagreement by the UK under the reformulated Brussels Regulation .
What is the joining process?
The United Kingdom unanimously requests the current parties to the 2007 Lugano Agreement, the three EFTA countries and the European Union (including Denmark, which is a separate country) to agree. According to Article 27 (3) of the 2007 Lugano Convention, Contracting States must “endeavor” to give their consent within one year. The deadline was April 14, 2021. While all three members of the European Free Trade Association have expressed support, the European Union has yet to make a formal decision.
On April 12, 2021, reports surfaced that the European Commission recommended that the European Union reject the UK’s request.[i] The Commission reportedly believes that the 2007 Lugano Agreement should be restricted to members of the European Free Trade Association and the European Economic Area (EEA).
However, the committee will not have the final say. This falls to the European Council, to which the heads of state and government of the European Union belong. The board is reportedly not expected to make a decision within weeks.
The European Union may continue to approve the UK’s accession to the 2007 Lugano Agreement in due course. In the meantime, the parties should remain confident that they will include applicable English law and jurisdiction clauses in their agreements, which they will continue to be upheld and enforced by the English courts. As mentioned in our previous publications, your choice of English law, jurisdiction, and terms of arbitration may lead to certain benefits.
[i] Financial Times, “Brussels Rejects UK Offer to Enter into Legal Agreement and Partition of European Union Countries,” 12 April 2021 (https://www.ft.com/content/7aad8362-ef75-4578-81eb-38b5d2c51223).