UK Government moves to ensure 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 from 01 April 2019. 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. This 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.

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.

Position under the Withdrawal Agreement

The Instrument of Accession 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 occurring in March 2019.

In the event of the Withdrawal Agreement being signed and ratified, 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.