Will a judgment from the UK be enforceable in Sweden after Brexit?
Since the end of 2020, the UK is no longer a member of the EU and Brexit has (and continues to) put many legal questions on their edge. One such question is whether Brexit affects the possibility to have a judgment from the UK enforced in another EU member state. The common rules within EU have played a crucial role regarding the issue of enforcement of judgments handed down in other EU Member States and have enabled effective enforcement of judgment throughout the EU. The Brexit withdrawal agreement does not regulate the issue of enforcement, which is why it is important to investigate how Brexit affects the possibility of having a judgment from the UK enforced in Sweden, as the main rule is that foreign judgments are not enforced in Sweden without support in an applicable regulation or convention.
The Brussel Recast Regulation is no longer applicable
In the EU, the Brussel Recast Regulation is central to the regulation of enforcement. The Regulation’s intent is for the EU Member States to mutually recognize each other’s judgments, and that a judgment from one Member State should be enforceable throughout the EU without the need for any special declaration for enforcement.[1] Brexit means that the UK, since the year end, is no longer a party to the Brussel Recast Regulation, and a judgment from the UK can thus no longer be enforced in Sweden based on the regulation. However, if the dispute procedure was initiated before 1 January 2021, the judgment can be enforced in Sweden based on the Brussel Recast Regulation.
UK is unlikely to accede to the Lugano Convention
The UK was previously, as a member of the EU, a party to the 2007 Lugano Convention but is, since 1 January 2021, no longer a party to the Convention since its membership expired in connection with Brexit.
The Lugano Convention is an international treaty to which the EU, Iceland, Norway and Switzerland are parties, and which is applicable in the field of private law. Materially, the Lugano Convention is almost identical to the Brussel Recast Regulation.[2] If a judgment is covered by the Lugano Convention, it shall be recognized in the other Contracting States without special procedure. However, in the case of enforcement, the Convention (unlike the Brussel Recast Regulation) requires an exequatur procedure, which means that a party must apply for a judgment to be declared enforceable in another Contracting State. Thus, enforcing a judgment under the Lugano Convention is more time consuming than the Brussel Recast Regulation.
The UK has applied to accede to the Lugano Convention, but for the UK to accede to the Lugano Convention, all parties to the Convention must agree.[3] On 4 May 2021, the European Commission announced that it considers that the EU should not give its consent to the UK acceding to the Lugano Convention.[4] The Commission has justified its position by explaining that, for the European Union, the Lugano Convention is a complementary internal market measure that concerns the EU-EFTA/EEA-context. In relation to all other third countries, the European Union’s consistent policy is to promote cooperation within the framework of the multilateral Hague Conventions.
Since the UK will probably not be allowed to accede to the Lugano Convention, at present only judgments from the UK relating to civil proceedings initiated before 1 January 2021 can be enforced in Sweden through it.
The Hague Convention remains applicable
The 2005 Hague Convention on Choice of Court Agreement (Hague Convention) is an international treaty of which the EU (except Denmark), Mexico and Singapore are parties. The Hague Convention is applicable in the field of private law, but the scope of the Hague Convention is more limited than the Brussel Recast Regulation. The Hague Convention only applies to exclusive prorogation agreements.[5] If the Hague Convention is applicable, a judgment given in a Convention State may be enforced in another Convention State if it is enforceable in the State of origin of the judgment.[6] For a judgment from another Convention State to be enforceable, an application for enforcement is required, which in Sweden is made to a competent district court.[7]
The UK was previously a party to the Hague Convention through its membership of the EU, but since 1 January 2021, the UK has been an independent party to the Convention. However, there is uncertainty as to when exclusive prorogation agreements must have been entered into for judgments from the UK to fall under the applicability of the Hague Convention. The UK has stated that it considers itself to have been a Contracting State to the Hague Convention without interruption, which would mean that the UK should be considered a member since 1 October 2015 (i.e. the date on which the EU became a member of the Hague Convention) and that exclusive prorogation agreements after that shall form the basis for the applicability of the Convention.[8]
However, the EU has expressed the opposite view and stated that the Hague Convention should be applied between the EU and the UK regarding exclusive prorogation agreements concluded after the UK accede to the Hague Convention as an independent convention state.[9] It is still unclear when the exclusive prorogation agreement must have been entered into for the Hague Convention to be applicable in relation to judgments from the UK. It is clear, however, that judgments from the UK that have been issued on the basis of an exclusive prorogation agreement entered into after 31 December 2020 can be enforced in Sweden after Brexit, but it is still unclear, in relation to judgments from the UK, what applies when the exclusive prorogation agreement has been entered into before that.
The European Commission announced on 4 May 2021 that the Commission plans to propose, in the near future, that the EU accede to the 2019 Hague Judgments Convention. If the UK were to join that convention, it would be applicable to future judicial cooperation with the EU.[10]
Enforcement of arbitration awards is not affected
Enforcement under the mentioned regulations and conventions does not deal with arbitration awards. Since the issue of enforcement of arbitration is primarily governed by the Convention on the Recognition and Enforcement of Foreign Arbitration of 1958, to which all EU Member States are affiliated. Brexit does not affect the possibility of having an arbitration award from the UK enforced in Sweden. Arbitration awards from the UK can thus continue to be enforced in Sweden on the same terms as before Brexit.
What to consider after Brexit?
Brexit means that litigation proceedings initiated after 31 December 2020 are not covered by the Brussel Recast Regulation or the Lugano Convention, and will therefore not be enforceable in Sweden based on them. Anyone wishing to have a judgment from the UK enforced in Sweden should therefore investigate when the dispute procedure, that led to the judgment, was initiated, since judgments relating to dispute proceedings initiated before 1 January 2021 can continue to be enforced in Sweden with the support of the Brussel Recast Regulation and the Lugano Convention. If the judgment is based on an exclusive prorogation agreement, the judgment can continue to be enforced in Sweden with the support of the Hague Convention. If the prorogation agreement was entered into before 1 January 2021, however, it is currently unclear whether a judgment from the UK is covered by the Hague Convention.
In order to ensure that a future judgment from the UK can be enforced in Sweden, it may be justified to enter into an exclusive prorogation agreement in order to ensure the applicability of the Hague Convention.
[1] See reason 3 and 4 to the Brussel Recast Regulation and Article 36 and 39.
[2] Benndorf & Morgell, Karnov commentary on Chapter 3, Section 2 of the Swedish Enforcement Code, note 83.
[3] Article 72.3 of the Lugano Convention.
[4] COM(2021) 222 final, Communication from the Commission to the European Parliament and the Council, Assessment on the application of the United Kingdom of Great Britain and Northern Ireland to accede to the 2007 Lugano Convention.
[5] Article 1 of the Hague Convention.
[6] Article 8.1 of the Hague Convention.
[7] Section 17 of the Act (2014:912) with Supplementary Provisions Concerning Court Jurisdiction and Recognition and International Execution of Certain Decisions.
[8] See the UK’s statement:
https://www.hcch.net/en/instruments/conventions/status-table/notifications/?csid=1318&disp=resdn.
[9] See the European Commission’s statement:
https://ec.europa.eu/info/sites/default/files/brexit_files/info_site/civil_justice_en.pdf.
[10] COM(2021) 222 final, Communication from the Commission to the European Parliament and the Council, Assessment on the application of the United Kingdom of Great Britain and Northern Ireland to accede to the 2007 Lugano Convention.
