Lugano Convention: Simplest solution for UK is to join EFTA, says Adrián Vázquez Lázara

Legal Affairs Committee chair says reaching a deal on legal cooperation agreement mainly a matter of political will and ‘good predisposition’
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By Andreas Rogal

Andreas Rogal is a senior journalist at the Parliament Magazine

06 Sep 2021

Ongoing tensions between the European Union and the United Kingdom over the Northern Ireland Protocol make it unlikely that progress in less familiar, but equally important areas can be expected.

One such case which, over the summer, had nevertheless received some notable attention by big media names, including CNN and most recently the Financial Times, is the UK’s application to re-join the Lugano Convention on legal cooperation between the EU and certain third countries.

The Lugano Convention clarifies which national courts can deal with certain cross-border civil and commercial legal cases and provides for easy mutual recognition of rulings.

It covers areas important to citizens and businesses, such as disputes over contracts, insurance, employment law and family law. The UK has been a country of choice for many cross-border litigants in settling their disputes, helped by competent lawyers and the pragmatic approach of its common law system based on case rulings, an exception in Europe.

The UK automatically left the convention when it exited the EU but applied for reaccession in April 2020.

However, after the European Commission informed the Swiss government - depository of the convention – earlier this year that it would not recommend accepting the UK’s application - in contrast to the other signatories, two issues were raised: the impact on the UK’s substantial legal business - London is, by a large margin, the preferred place to settle international commercial disputes covered in the convention - and the impact on citizens who profit from the convention’s provisions on cross-border cases of family law.

“Being part of the Lugano Convention requires, as a matter of principle, to have that close link to the Single Market, respecting EU regulation and accepting the European courts of justice hierarchy. As we know, a key element of the Brexit deal is that the UK is no longer part of the Single Market, precisely due to the British refusal to apply European Law in their territory" Adrián Vázquez Lázara, chair of the European Parliament’s Legal Affairs (JURI) Committee

When the Parliament Magazine first reported on the issue in early August, the chair of Parliament’s Legal Affairs (JURI) Committee, Adrián Vázquez Lázara was unavailable. However, he has now sent us his comments.

In its arguments against the UK’s application, the Commission stressed that the Lugano Convention was first and foremost a tool for the EU’s Single Market, and Vázquez Lázara agrees.

Pointing out that it is linked to the relationship between the Union and non-EU countries that have accepted “a relevant amount” of legal provisions related to the Single Market, he says, “being part of the Lugano Convention requires, as a matter of principle, to have that close link to the Single Market, respecting EU regulation and accepting the European courts of justice hierarchy.”

He continues, “As we know, a key element of the Brexit deal is that the UK is no longer part of the Single Market, precisely due to the British refusal to apply European Law in their territory.”

Even though the matter is still under discussion, he says that for a third country as unattached to the Single Market as the UK, matters of civil judicial cooperation should be regulated by the Hague Conventions.

As various legal experts have pointed out, the Hague Conventions are substantially less comprehensive than Lugano, allowing for parallel court cases in different jurisdictions, and not providing for the enforcement of one jurisdiction’s rulings in another.

While CNN’s reporting has prioritised the scenario of London’s diminishing attractiveness for dealing with commercial cases, the FT, perhaps interestingly for an economy focussed daily, has not dwelled on the possible impact for the UK legal industry but concentrated instead on the consequences for citizens in EU-UK cross-border family law court cases.

Quoting practitioners and experts based in London, the article suggests that these citizens will suffer prejudice and uncertainty about cost and enforceability, calling, in conclusion, upon the EU to “put politics aside” as one practitioner put it, and let the UK re-join Lugano “immediately”.

However, Vázquez Lázara communicates a different impression from his exchanges with the profession saying, “During recent months, I have meet dozens of practitioners engaged in cross-border contractual matters involving the EU and the UK, in order to know first-hand how the Britain’s exit from the Lugano Convention in January 2021 has affected their clients and I can tell you that none of them expressed special concerns about it.”

“On the contrary, they have had very few complications when enforcing a British or European judgement on the other side of the Channel.”

He admitted however that that did not necessarily mean that no problems had already arisen, nor that some others could do so soon if both parties did not reach a workable solution.

Moving forward, Vázquez Lázara sees three options, stressing that Parliament’s Legal Affairs Committee has been, and will continue to be, in touch with both the British government and the other EU institutions to work on a deal, and that if compromises are to be reached “it is mainly a matter of political will and good predisposition.”

One possibility could be an enhanced understanding of how to best apply the Hague Conventions, another an “ad hoc agreement in the future that allows the UK to be part of the Lugano Convention by means of accepting certain conditions.” or, “the simplest solution would be as obvious as joining the EFTA Agreement, with all its consequences”.

The agenda of the next Justice and Home Affairs Council (JHA) meeting is currently not available but given the number of more pressing issues at hand now, it would be surprising to see Lugano featuring on it, let alone a decision by the JHA on the UK’s request to re-join.

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