The 2019 Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (the HJC) enters into force in England & Wales on 1 July 2025 and is of great practical importance for the cross-border recovery of assets. It is the first worldwide convention on recognition and enforcement of foreign judgments; and will re-establish a regime for the mutual enforcement of judgments with EU Member States.
The purpose of this article is to highlight the three main benefits when including England & Wales in any new commercial contracts:
- There will soon be greater certainty in relation to the enforceability of judgments from the English Courts across contracting states;
- Parties can benefit from a shorter and less costly process than is currently available in enforcing those judgments in circumstances where Hague 2019 applies; and
- There are now more contractual options available to businesses who wish to be able to enforce across a range of jurisdictions.
Stephen Baker (Partner) and Jake Gatley (Senior Solicitor) discuss in more detail the advantages of commencing litigation and arbitration in England & Wales, and what to expect with regards to enforcing judgments and arbitration decisions.
With English being the most widely spoken language in the world, and London being a global financial centre, it is no surprise that parties from multiple countries wish to have an agreement governed by the law of England and Wales. When you have parties from different jurisdictions, it is often seen as an easy compromise when each side prefers to have disputes heard in each of their home courts. However it is not just a question of where to bring a claim, but also how you enforce a judgment once it is obtained. Considerations such as the speed of any particular country’s court system and how consistent and uniformly applied legal principles are can all affect how quickly you can obtain justice if you have to fight a case to trial or how easy it is to pursue a negotiated settlement alongside any court case.
In the latest report published by the Law Society of England and Wales, London remains the most attractive centre for commercial litigation and international arbitration, outperforming other global dispute resolution hubs. On 27 June 2024 the UK ratified the HJC which soon comes into force on 1 July 2025. This will make the English Courts and law an even more attractive proposition when deciding on jurisdiction and governing law clauses in a commercial contract.
The benefits of applying English law
English law is recognised and respected the world over because of the stability and quality of our courts, our laws and legal professionals. Even with the ever-increasing demand following the Covid 19 pandemic, the English Courts are respected and trusted to make quality judicial decisions, in an efficient and cost-effective manner. The main benefits of English law are that it is overseen by a highly respected independent judiciary, the court system is reliable in comparison to some jurisdictions, and tends to produce predictable judgments.
Between 2022-2023, there were 212 written judgements delivered by the London Commercial Courts (LCC). This is compared to 130 in the New York Commercial Division and 33 in the Singapore International Commercial Court. In the London Court of International Arbitration (LCIA), there were 445 appointments of arbitrators in 2023, compared to 359 in Singapore and 284 in Hong Kong. The LCC has an impressive turnaround time in terms of conducting trials. Between October 2022 and September 2023, 46% (28 out of 57) of contested trials across all divisions of the LCC were completed within just four working days. Similar to the previous year in which the figure was 48%, the LCC consistently handles almost half of all contested trials in less than a week.
As the second largest market for legal services globally, the UK’s status is also reflected in its economic output. For mergers and acquisitions, there is approximately £250 billion worth of deals annually which are governed by English law. In addition, there is £80 billion worth of insurance contracts and £545 trillion worth of OTC derivatives per annum. The USA is the UK’s most important trading partner for legal services, accounting for almost £2bn in exports from the UK in 2021. And the European Union is the UK’s most valuable trading bloc for legal services, accounting for £2.15bn in exports from the UK in 2021. Considering both the UK’s prominence as an international legal hub and sizeable economic activity, it is no wonder English law is the governing choice for a significant number of commercial transactions.
Enforcing UK judgments in foreign jurisdictions
Since the UK’s exit from the EU on 1 January 2021, the UK acceded in its own right to the 2005 Hague Convention on Choice of Court Agreements. Prior to Brexit, the UK was subject to the recast Brussels Regulation. The Hague Convention is an international treaty which aims to provide a uniform framework for recognition and enforcement of judgments between contracting states. It requires contracting parties to the convention to recognise and enforce civil and commercial judgments which fall within its scope, according to a set of common rules. Those rules relate to exclusive jurisdiction agreements (also known as forum selection clauses or choice of court agreements) in civil and commercial matters, and enforcement of a judgment given by a court of a contracting state designated in the jurisdiction agreement. Building on the existing framework, the good news for businesses involved in international trade is that the UK has now ratified the HJC and will shortly come into force on 1 July 2025.
To date the HJC has been ratified by the UK, EU (excluding Denmark), Uruguay and Ukraine. It has been signed, but not yet ratified, by other states including the US and Russia. It is therefore expected that its territorial scope will continue to expand.
Although not the main subject matter of this article, if a party is looking to enforce a judgment obtained in a Commonwealth jurisdiction, the statutory regimes of the Administration of Justice Act 1920 (AJA 1920) or the Foreign Judgments (Reciprocal Enforcement) Act 1933 are likely to apply. For countries not covered by the above European or statutory regimes, such as the Unites States or Japan, the common law regime is the default regime. Any judgment covered by the AJA 1920 can be enforced under the common law regime instead. However, the judgment creditor will not normally recover the costs of such enforcement.
The UK as a venue for international arbitration and mediation
Already with international arbitrations, there are 172 contracting states of the 1958 New York Convention on Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention). Countries signed up to the New York Convention undertake to give effect to an agreement to arbitrate, and to recognise and enforce arbitration awards made in other nation states. It therefore provides for the extensive enforcement of international arbitration awards. In addition to international arbitrations administered by the LCIA, the International Chamber of Commerce (ICC) and International Centre for Dispute Resolution (ICDR), arbitrations seated in England, Wales or Northern Ireland are governed by the Arbitration Act 1996 (Arbitration Act). The Arbitration Act is a comprehensive act backed up by a mature yet flexible, common-law system.
The UK’s mediation services are also highly regarded internationally. The leading mediation institution in England is the Centre for Effective Dispute Resolution (CEDR), which provides mediation services. The Panel of Independent Mediators (PIMs) is an organisation of leading mediators across the country. It is worth bearing in mind that settlement agreements which are reached through mediation are also contracts, and are therefore enforceable if the requirements for a valid contract are satisfied. In the UK.
For those considering litigation in the UK, the current time and cost is mitigated (in part) by the availability of summary judgment or judgment in default, if no response is forthcoming from a judgment debtor. If provided for in a contract, the UK also is an attractive venue for parties with respect to arbitration. Therefore it is worth considering the UK as a centre for resolving disputes, and the conditions are set to improve even further with the arrival of the HJC this summer.
To conclude, given that the HJC is soon to come into force we suggest that parties to commercial contracts should review their existing agreements and carefully consider including England & Wales in any new agreements they enter into. It is also important to assess the implications of existing jurisdiction agreements and which would be most appropriate going forward.
If you have any questions regarding this article, please contact the members of our Dispute Resolution practice.
