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The Impact of Brexit on Jurisdiction, Recognition and Enforcement – A Swiss Perspective

29.01.2021

On 31 December 2020, the Brexit transition period ended, marking the departure of the United Kingdom from the European Union. The departure also brings changes to the relations between the UK and Switzerland.

In many key areas, Switzerland and the UK will essentially maintain their existing legal relationships through seven agreements, which came into force on 1 January 2021. However, these agreements do not cover an important area in civil and commercial matters, that is, court jurisdiction and the recognition and enforcement of foreign judgments.

As between the EU and Switzerland, these questions are governed by the Lugano Convention. During the 11-month transition period, the UK was still treated as a contracting party to the Lugano Convention. As of 1 January 2021, national laws will apply to the questions of court jurisdiction and the recognition and enforcement of foreign judgments, with exceptions applying only if a treaty is in force in both states (e.g. the 1973 Hague Convention on the Recognition and Enforcement of Decisions Relating to Maintenance Obligations).

From 1 January 2021 onwards, the legal situation can be summarised as follows:

1. Jurisdiction

In Switzerland, the jurisdiction of courts in civil and commercial matters is governed by the Private International Law Act (PILA), whereas English courts will apply common law rules.

However, both in Switzerland and the UK, courts and authorities seized with cases under the Lugano Convention before 1 January 2021 retain jurisdiction to handle such cases after the withdrawal date.

2. Recognition and Enforcement of Foreign Judgments

For Switzerland, the Federal Office of Justice has recently expressed the view that, even after exit day, the recognition and enforcement of judgments that were issued in the UK before 1 January 2021 shall still be governed by the Lugano Convention. The Federal Office of Justice refers to general principles of international and civil procedural law in support of this view.

At the same time, implementing legislation in the UK provides for a wider approach: The Lugano Convention remains applicable with regard to the recognition and enforcement of foreign judgments in the UK if a judgment was rendered in proceedings initiated in the courts of a contracting party before exit day (regulation 92(1)(b)(i) of the Civil Jurisdiction and Judgments (Amendment) (EU Exit) Regulations 2019).

Similarly, Article 67(2)(a) of the Brexit withdrawal agreement signed on 24 January 2020 reflects that wider approach: The Brussels Ia Regulation No 1215/2012 (which largely corresponds to the Lugano Convention) continues to apply to the recognition and enforcement of foreign judgments, if those judgments were or are rendered in legal proceedings instituted before the end of the transition period.

Whether Swiss courts will indeed take a (narrower) approach that differs from the UK and EU positions remains to be seen.

3. Recognition and Enforcement of Arbitral Awards

The recognition and enforcement of arbitral awards is governed by the New York Convention, which has been adopted by more than 160 states. Since the UK is and remains a member to the New York Convention, the recognition and enforcement of arbitral awards will not be affected by Brexit. It may nevertheless affect ancillary proceedings to international arbitrations, including interim relief such as freezing orders (see immediately below).

4. Enforcement of Worldwide Freezing Orders

Another question of interest is the enforcement of English worldwide freezing orders under Swiss national law. A worldwide freezing order is a form of protective measure which aims to ensure the enforcement of a judgment or arbitral award. It is usually sought at a pre-trial stage to prevent the defendant from disposing of his assets other than in the ordinary course of business.

The Swiss Federal Supreme Court has held that English worldwide freezing orders are in principle enforceable under the Lugano Convention, although uncertainties remain as to the means of enforcing such orders in Switzerland. However, enforceability under the PILA is a matter of debate. Swiss courts generally refuse to declare worldwide freezing orders issued by non-EU member states enforceable in Switzerland. Therefore, as of 1 January 2021, the position as to the enforceability of English worldwide freezing orders may well change.

5. Outlook

On 8 April 2020, the UK applied to join the Lugano Convention as an independent contracting party. Accession is subject to unanimous approval of all contracting parties (Denmark, the EU, Iceland, Norway and Switzerland). Once all contracting parties have given their approval, the UK will be invited to accede and the Convention will enter into force for the UK on the first day of the third month following ratification (Article 69(5) Lugano Convention). While Switzerland approved the accession by Federal Council decision of 19 June 2020, other parties – in particular the EU – have not given their consent to date.

 

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