Promoting certainty in international trade and investment: The 2005 Hague Convention and the enforcement of foreign judgments in the UK and Switzerland
Introduction
On 4 September 2024, the Swiss Parliament ratified the 2005 Hague Convention on Choice of Court Agreements (“2005 Hague Convention”)[1], which entered into force for Switzerland on 1 January 2025. The 2005 Hague Convention will impact the enforcement of UK judgments in Switzerland and the enforcement of Swiss judgments in the UK. Choice of court (or forum) clauses are likely to receive increasing contractual – and judicial - attention.
Background
As a consequence of Brexit, from 1 January 2021, the UK is no longer a party to the Convention on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters 2007 (“2007 Lugano Convention”) which regulates the recognition and enforcement of judgments between EU member states and Switzerland, Norway, and Iceland.
Under the 2007 Lugano Convention it is possible to recognise and enforce foreign judgments of contracting parties directly, article 33(1) and 38(1) 2007 Lugano Convention. The courts of the enforcement state are prohibited from:
- investigating the jurisdiction of the foreign court, article 35(3) 2007 Lugano Convention; and
- questioning the merits of the judgment of the foreign court, article 36 2007 Lugano Convention.
Following Brexit, the UK sought to accede to the 2007 Lugano Convention in its own right. It is reported that this was approved by Switzerland, Norway, Iceland, but not by the EU. The EU Commission was of the view that only states that are part of the EU internal market may be signatories to the Lugano Convention.[2] The negotiations between the UK and the EU are continuing in this regard.
In the absence of any applicable statute or treaty, from 1 January 2021 reliance has to be placed on the common law for the enforcement of Swiss judgments in England and Wales.[3] Likewise UK judgments will need to be enforced in Switzerland through the Swiss Federal Act on Private International Law (“SPILA”).
In the absence of a treaty framework with uniform rules of jurisdiction, it is more difficult to enforce a foreign judgment under the common law than under the 2007 Lugano Convention.
Enforcement in England and Wales through the Common Law
A foreign judgment can be enforced according to the common law if it satisfies the following conditions:
- The judgment is for a debt or definitive sum of money;
- The judgment does not relate to a penalty or a tax. This requirement is not too narrowly interpreted. For instance, a repayment order made in Thai criminal proceedings was enforceable in England on the basis that it was characterised as a civil judgment debt and not as a penalty or fine, The Official Receiver of the Bangkok of Commerce Public Company Limited v Rakesh Saxena and others [2023] EWHC 521 (Comm);
- The judgment is final and conclusive. The fact that a judgment is open to review or appeal does not prevent it from being final and conclusive, Midtown Acquisitions LP v Essar Global Fund Ltd [2017] EWHC 519 (Comm); and
- The foreign court must have jurisdiction under the English conflict of law rules, Adams v Cape Industries Plc [1990] Ch. 433. This requires the party to have consented, expressly or implicitly to the jurisdiction of the foreign state. Generally speaking, unlike under the Lugano Convention, jurisdiction cannot be established by the place of performance of the obligation or the place where the tort occurred.
According to the common law the party seeking to enforce a foreign judgment will first need to apply for summary judgment under Civil Procedure Rule (“CPR”) 24.3 on the basis that the defendant has no real prospect of successfully defending the claim.
Enforcement of UK judgments in Switzerland under the SPILA
It is more difficult to enforce a foreign judgment under the SPILA than under the 2007 Lugano Convention. In order to enforce a foreign judgment, the following three conditions need to be satisfied, article 25 SPILA:
- The jurisdiction of the foreign court needs to be established. There is no such need under the 2007 Lugano Convention.
- The foreign judgment must be final and conclusive. This means that no appeal must be possible.
- None of the reasons for refusing enforcement in article 27 SPILA applies.
In order for the foreign court to have jurisdiction, at least one of the following conditions usually must apply, article 26 SPILA:
- The defendant is domiciled in the state of the foreign court.
- The judgment relates to a commercial dispute and the parties signed an exclusive jurisdiction clause.
- The judgment relates to a commercial dispute and the defendant submitted to the jurisdiction of the foreign court.
- The judgment relates to a counterclaim and the claim was brought in the foreign state.
The Swiss courts must refuse enforcement if one of the reasons in article 27 SPILA applies:
- The foreign judgment is manifestly incompatible with Swiss public policy.
- The claim was not properly served in accordance of the laws of the foreign state (unless the claimant submitted to the jurisdiction of the foreign court).
- The foreign judgment breaches fundamental principles of Swiss procedural law.
- A previous claim regarding the same dispute between the parties was initiated in Switzerland or a judgment regarding the same dispute in a third country exists.
Similar grounds for refusing enforcement apply under article 9 2005 Hague Convention.
The 2005 Hague Convention
The 2005 Hague Convention offers a new possible route forward. Following Brexit, the UK acceded to the 2005 Hague Convention as a contracting state party on 28 September 2020.[4]
The 2005 Hague Convention has been signed and ratified by the EU, Mexico, UK, Singapore, Montenegro, Denmark, Ukraine, Republic of Moldova, Albania and lastly Switzerland. The USA, China and Israel have signed but not yet ratified or acceded to the Convention which means that it is not yet in force for them.[5]
The framework of the 2005 Hague Convention applies between the UK and Switzerland. The parties must have signed a written exclusive choice of court agreement designating one of the contracting states’ courts as having exclusive jurisdiction, article 3 2005 Hague Convention. The 2005 Hague Convention only applies to the enforcement of foreign judgments within the material scope of application of the Convention in which an exclusive choice of court agreement has been made after the 2005 Hague Convention came into force for the applicable state, article 16(1) 2005 Hague Convention. For Switzerland this means that the 2005 Hague Convention only applies to exclusive choice of court agreements signed after 1 January 2025.
The 2005 Hague Convention only applies to international civil and commercial matters, article 1(1) 2005 Hauge Convention. A number of specific areas are excluded from the ambit of the 2005 Hague Convention including maintenance, family matters, employment and consumer matters, article 2 2005 Hague Convention. This is broader than under the 2007 Lugano Convention.
A judgment includes the merits as well as any determination costs or expenses of the proceedings by the court, article 4(1) 2005 Hague Convention.
The courts of the contracting states are obliged to dismiss proceedings where an exclusive jurisdiction agreement applies in favour of another contracting state, article 6 2005 Hague Convention. There are limited exceptions to this principle, such as the existence of a manifest injustice to the public policy of a state, article 6(c) 2005 Hague Convention.
The key principle of the 2005 Hague Convention is that if a judgment is enforceable in the state of origin, it is enforceable in a contracting state so long as there is a valid exclusive choice of court agreement. There are limited exceptions to this principle, article 9 2005 Hague Convention:
- The exclusive jurisdiction agreement is null and void;
- A party lacks capacity;
- The claim form was not correctly served upon the defendant;
- The foreign judgment was obtained by fraud;
- Enforcement would be manifestly incompatible with the public policy of the state;
- The foreign judgment is inconsistent with a previous judgment.
Recognition and enforcement can also be refused in relation to judgments which award non-compensatory damages (such as exemplary or punitive damages).
In England and Wales, the enforcement procedure of foreign judgments in reliance of the 2005 Hague Convention is governed by a registration procedure in CPR 74.2-74.10. The following documents need to be produced to enforce a foreign judgment through the 2005 Hague Convention, article 13:
- A certified copy of the foreign judgment;
- The exclusive choice of court agreement;
- Proof of notification of the defaulting party in the case of a default judgment;
- Evidence that the judgment is enforceable in the state of origin;
- Certified translations if applicable.
Conclusion
Citizens and companies operating in a cross-border environment often look for guarantees: certainty and predictability in their commercial transactions. The 2005 Hague Convention offers an additional tool for UK and Swiss interested companies and persons. Careful consideration to designating a particular jurisdiction in the event of a dispute can help to manage and mitigate litigation risks and the associated costs of any dispute.
[1] https://www.hcch.net/en/news-archive/details/?varevent=1004
[2] Manko, Rafal, The United Kingdom's possible re-joining of the 2007 Lugano Convention, European Parliamentary Research Service, November, 2021.(https://www.europarl.europa.eu/RegData/etudes/BRIE/2021/698797/EPRS_BRI(2021)698797_EN.pdf)
[3] The enforcement of judgments in Northern Ireland and Scotland is governed by each territory’s respective private international law.
[4] The accession entered into force on 1 January 2021.
[5] Hague Convention status table (https://www.hcch.net/en/instruments/conventions/status-table/?cid=98).