Beyond Brexit transition – litigation and the enforcement of judgment

What’s the issue?

EU law currently provides a simple, fast and cost-effective mechanism for a party to enforce a judgment of the English courts in the courts of an EU Member State and vice versa. This mechanism will no longer be available for claims commenced in the UK after the 1 January 2021, unless otherwise agreed between the EU and the UK.

Where are we now?

From 1 January 2021, an English judgment will have the same status in an EU Member State as a judgment from, for example, a New York Court. As such, it will be enforced according to the domestic enforcement arrangements in each Member State, unless either of the following apply: (a) the Lugano Convention (if the EU and Denmark allow the UK to independently accede); or (b) the Hague Convention (which is relevant in a more limited set of circumstances).

What impact does this have?

Businesses should be aware that the way that English judgments will be enforced in the EU and vice versa, will change for claims commenced in 2021. The domestic enforcement arrangements in most Member States are well-developed, though they are likely to be more time-consuming and more costly – local law advice will be required. Businesses should factor these considerations into both their litigation strategies and in determining the types of dispute resolution clauses to use in their contracts.