The Hague Convention on Choice of Court Agreements: post-Brexit recognition of exclusive jurisdiction clauses

On 28 December 2018 the UK Government lodged an Instrument of Accession to bring the Hague Convention on Choice of Court Agreements into effect for the UK post-Brexit. For more, see here.

On 28 December 2018 the UK Government lodged an Instrument of Accession with the Ministry of Foreign Affairs of the Kingdom of the Netherlands to bring the Hague Convention on Choice of Court Agreements into effect for the UK from 01 April 2019. In view of the subsequent extension of the period for withdrawal of the UK from the EU, this accession has since been suspended until 13 April (see HCCH notice here). The accession aims to ensure the continuity of the UK’s membership of the Hague Convention, to which it has previously been a party through its EU membership, in the event of a “No-Deal Brexit”. Courts of countries which are a signatory to the Hague Convention should recognise and enforce a contractual choice of exclusive jurisdiction of the courts in another signatory state.

Courts of countries which are a signatory to the Hague Convention (so including the EU27) should recognise and enforce a contractual choice of exclusive jurisdiction of the courts in another signatory state. The Convention provides that Contracting States shall give effect to exclusive choice of court agreements; such agreements will be deemed to be exclusive unless the parties have expressly agreed to the contrary. This, accordingly, effectively reproduces the effect of the Brussels Regulation Recast in relation to exclusive choice of court agreements.

Second, and perhaps more importantly, the Convention provides that the courts of Contracting States other than the chosen court must suspend or dismiss proceedings in such courts in favour of the chosen court. This would therefore prevent the revival of the so-called “Italian Torpedo”, ie the bringing of proceedings in a non-chosen court in order to prevent, delay or complicate the bringing of proceedings in the chosen court.

The Civil Jurisdiction and Judgments (Hague Convention on Choice of Court Agreements 2005) (EU Exit) Regulations 2018 provide that the English courts will treat choice of court agreements entered into after exit day as being subject to the rules of the Hague Convention.

Contractual choices of jurisdiction are currently governed by the Brussels Regulation (Recast), which will cease to apply to choices of UK courts when the UK leaves the EU. In July 2018 a survey of businesses by Thomson Reuters Legal found that 35% of respondents had changed dispute resolution clauses in their contracts in the past two years, with just over half of those having chosen for disputes to be heard in EU courts, such as those in France or Germany, rather than in the UK.

With the UK a signatory to the Hague Convention in its own right, courts of EU Member States will (or at least should) now continue to recognise exclusive jurisdiction clauses (but only exclusive ones) in favour of UK courts. After Brexit, they will not necessarily recognise non-exclusive jurisdiction clauses.

Transitional Provisions

One practical problem may be the transitional provisions. The Hague Convention expressly applies to “exclusive choice of court agreements concluded after its entry into force for the State of the chosen court” (Art. 16) and will not, it appears, apply to choice of court agreements which have been entered into by the UK during its membership as an EU Member State i.e. prior to the UK’s accession in its own right.

In the event of a No Deal Brexit, the Hague Convention will not apply to contracts containing an exclusive jurisdiction clause which were agreed between 01 October 2015 and Exit Day and to which Brussels Recast or the Lugano Convention applied, as the Hague Convention will have not retrospective effect where the EU regime previously applied.

Position under the Withdrawal Agreement

The Instrument of Accession to the Hague Convention makes clear that, in the event of the Withdrawal Agreement between the EU and the UK being signed, the UK will withdraw the Accession Instrument and continue to be treated as an EU Member State, and thereby a signatory of the Hague Convention, for the duration of the transition period. The instrument has therefore been lodged only for the purposes of a possible “No-Deal” Brexit.

It is unclear as to how the arrangement for the UK to effectively be recognised as an EU Member State during the transition period would affect the recognition of exclusive jurisdiction clauses in favour of the UK courts by the other signatories of the Hague Convention; Singapore and Mexico. It seems likely that with the UK having formally left the EU, the courts of these countries would not recognise the UK as a Hague Convention country.

The UK government has also signaled that it will attempt to join the Lugano Convention, to which all EFTA states are signatories and which has the benefit of recognising non-exclusive jurisdiction clauses. However, joining Lugano requires the approval of all existing signatories and it is unclear how long this may take.

The benefit of exclusivity

Parties keen to ensure that their choice of the English courts will be recognised across the EU after Brexit should use an exclusive jurisdiction clause to take advantage of the Hague Convention.

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.