Enforcement of judgments in the EU post-Brexit
The post-Brexit transitional period, which expires on 31 December 2020, keeps the UK aligned with a number of EU treaty provisions while the terms of a long-term deal are negotiated. One of those transitional provisions is for the mutual recognition of court judgments between EU member states and the UK.
However, for UK businesses with, or in the process of obtaining, a judgment against a defendant in another EU state, the time to take advantage of this arrangement is fast running out.
What’s the current situation with enforcing judgments?
Until the end of the transition period on 31 December 2020, a UK company that has secured a judgment in the English courts against a company in an EU state (for example, Germany) can apply to the English court for a “certified” copy of that judgment. The certified copy can then be sent to the German court and, once declared enforceable there (which it must be, under the treaty provision), it will be enforced in Germany against the judgment debtor as if it were a judgment of the German courts.
Come 1 January 2021, however, the courts of EU member states will no longer automatically declare UK judgments enforceable in their jurisdictions.
How can I ensure that a judgment is automatically declared enforceable in another EU member state before the end of the transitional period?
Information included in the European Commission’s Q&A document makes it clear that merely obtaining a “certified” copy of a UK judgment from a UK court before the end of the transition period will not, of itself, be enough to ensure the automatic recognition and enforcement of it in other EU states.
In order to take advantage of the mutual recognition and enforcement regime, the “certified” copy of the judgment must also be formally declared enforceable (referred to in the Q&A as “exquatur”) by the enforcing member state no later than 31 December 2020.
What will happen after the transitional period?
Without any treaty in place, the courts of the country of intended enforcement will decide whether to recognise and enforce a foreign judgment. They will do this in accordance with their own laws, which can make enforcement difficult and expensive.
The position changes if another treaty is in place, such as the Hague Convention on Choice of Court Agreements (the “Hague Convention”), which also provides for the mutual recognition of judgments between different countries.
However, the Hague Convention only came into force for EU member states (including the UK) on 1 October 2015 and therefore does not apply to judgments arising out of contracts made earlier than that date.
The UK is likely to ratify the Hague Convention in its own right this year, to “replace” the mutual recognition provisions it will lose as a result of Brexit. However, this has not yet been confirmed.
If neither the EU regime, nor the Hague Convention, apply to a UK judgment then it will only be enforceable in accordance with the local laws of the country of enforcement.
Those businesses who have obtained, or are in the process of obtaining, judgments against EU-based entities in the UK courts are best advised to obtain a certified copy of the judgment and have it declared enforceable in the relevant EU member state before 31 December 2020.
If you have obtained a UK judgment against a person or entity that will have to be enforced in the EU, we can help you to enforce that judgment now or advise you on the implications of delaying enforcement beyond 31 December 2020.
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