The UK is one of Ireland’s largest trading partners with Irish exports to Britain totalling €12.4bn in 2020.
Given Ireland’s level of trade with its nearest neighbour, it is inevitable that disputes will arise leading to court proceedings. In the aftermath of Brexit, what options do creditors have in enforcing a judgement handed down by a UK court in Ireland or vice versa? The options available will depend on when proceedings commenced.
Proceedings commenced before 11:00pm on 31 December 2020
Where legal proceedings were issued in either Ireland or the UK before 31 December 2020, the parties to these proceedings can continue to rely on Brussels I Regulation (the Recast Regulation) which provides that in most cases, a Judgement obtained in one member state can be enforced in another member state without any “special procedure” being required.
The Recast Regulation has greatly reduced the time and costs involved in cross border enforcement in the EU and is still available to creditors provided proceedings commenced before 31 December 2020. Importantly, it is not necessary for a judgement to have been handed down by that date.
Proceedings commenced after 11:00pm on 31 December 2020
Brexit means that judgement enforcement between Ireland and the UK from now on is likely to be a more lengthy and complicated process as the Recast Regulation no longer applies to new proceedings commenced after the cut off point. Creditors will now have to rely on the procedures currently available to enforce non-EU judgements, namely the 2005 Hague Convention (the Hague Convention”) or the existing common law rules.
The UK acceded to the Hague Convention in its own right on 1 January 2021. The Hague Convention only allows for the enforcement of judgements in another jurisdiction where the parties have agreed an exclusive jurisdiction clause, which is the norm in most commercial contracts. The Hague Convention has a number of limitations, most particularly in that it cannot be used where protective measures such as injunctions are required.
Where the Hague Convention cannot be used, an application to Court will be required under existing common law rules. This requires new proceedings to be issued in the country where enforcement is required. To succeed in this application, the judgement obtained must be for a definite sum of money, be final and conclusive (i.e. not subject to an Appeal) and awarded by a Court of competent jurisdiction. This can be a lengthy and costly process and there are wider grounds upon which a Court can refuse recognition of the judgement compared to the Recast Regulations.
Unfortunately, neither the Hague Convention nor the existing common law rules provide an adequate replacement to the Recast Regulations. A practical solution would be for the UK to join the Lugano Convention, which governs the enforcement of judgements between EU member states and members of the European Free Trade Association and contains many provisions found in the Recast Regulations.
In April 2020, the UK applied to join the Lugano Convention. This application, which is supported by some non-EU members of the Lugano Convention, was dealt a blow on 4 May 2021 when the EU Commission stated that it opposed the UK’s application on the basis of its lack of a “special link” to the internal market. While the Commission’s recommendation is not binding on the Council of the European Union, who will make the final decision by way of majority vote of member states, it does mean that the current uncertain and unsatisfactory position is likely to continue in the immediate term.