Lugano posturing is bad for everyone



It is now over a month since the European Commission advised the European parliament and council that the UK should not be allowed to join the Lugano Convention. Uncertainty continues to reign, bringing a detrimental impact to the 400 million-plus citizens of the 27 European Union member states (EU27) as well as UK citizens, notably those who fall victim to serious injury overseas. The harmful effects on EU and UK victims, consumers and workers is compounded by the commission’s apparent strategy: it has not put the question of UK accession to the council for a vote. The commission is effectively trying to kick Lugano into the long grass, leaving it to the individual member states to get the issue back in play so they can reach a decision.

The position taken by the commission is bad news for individual victims seeking to pursue a claim with a cross-border element involving the UK and the EU27. This is true of litigants not only seeking to bring and defend claims in the UK, but across the EU27. Such claims are likely to be rendered more difficult, time-consuming and expensive under the various domestic rules of the EU27 and the UK. For the first time in 50 years, the issues around recognition and enforcement require careful pause for thought before embarking on litigation.

The essential rationale behind the European regime on jurisdiction, of which the Lugano Convention forms an integral part, is that a defendant should be sued in the courts of their domicile. There are various exceptions to this default rule relating to vulnerable claimants such as injury victims and consumers. These exceptions aim to protect the weaker party in a dispute, with the important caveat that liability insurers can be sued directly in an injured claimant’s home court. The rules are applied mechanistically. It is a cornerstone of the legislation that parties must be able to predict where they are likely to be sued without any fear of the courts of a signatory state unexpectedly seizing exorbitant jurisdiction.

Without the European regime, claimants pursuing a foreign defendant must consider whether or not the claim can be brought within the jurisdictional gateways contained in the Civil Procedure Rules and whether the courts of England and Wales are the forum conveniens, that is to say the appropriate forum within which to bring the claim. This will lead to increased uncertainty on jurisdiction, and legal uncertainty always carries with it increased cost and delay. A good example of this is the nine-year jurisdictional saga in FS Cairo v Brownlie [2021] 2 All ER 605. This case involving an accident in Egypt is currently wending its way through the Supreme Court for the second time.

Furthermore, the loss of the European regime means that English judgments are not automatically recognised and enforceable in the courts of the EU27. This is of fundamental importance in any claim, with enforcement difficulties potentially having profound consequences for catastrophic injury claimants seeking to enforce an award of damages and costs.

The commission’s stance is that the Lugano Convention supports the EU’s relationship with third countries that have a particularly close regulatory integration with the bloc. For all other third countries (in the commission’s eyes) the Hague Conventions provide an adequate framework for civil judicial cooperation.

First, given the unprecedented nature of the Trade and Cooperation Agreement between the EU and UK and following more than 40 years of EU membership, it is arguable that the UK does have a special link to the internal market.

Second, for the 400 million-plus citizens throughout the EU27, as well as individuals in the UK, the Hague Conventions are no replacement for Lugano.

The Hague Choice of Court Convention specifically excludes consumer and employment contracts from its scope. The Hague Judgments Convention (which, despite good intentions, both the EU and UK are yet to accede to) also has significant limitations. It only deals with enforcement, not jurisdiction. It excludes claims arising from the carriage of passengers, which would appear to extend to a claim by a passenger seriously injured in a road traffic accident. It also excludes interim measures, which might extend to the enforcement of an order for interim damages.

In May, several non-governmental organisations and legal experts signed an open letter to the EU calling on it to allow UK accession to Lugano to aid access to justice for victims of corporate human rights abuses. The signatories, including Amnesty International, the International Federation for Human Rights and several highly regarded academic lawyers, observed that: ‘The forum non conveniens doctrine allows a defendant corporation to argue that the most appropriate forum for cases against them is that of the victims’ domicile. This allows the transfer of transnational cases against European companies away from European courts to jurisdictions where claimants are likely to face a variety of additional barriers to accessing justice. The doctrine also provokes jurisdictional arguments that add years to litigation… The EU and its member states have committed to advancing access to judicial remedy for victims of corporate human rights abuses. In light of this international human rights commitment, the UK must be allowed to accede to the Lugano Convention.’

It follows that the main losers in this political posturing will be the ordinary victims of accidents and corporate abuses, consumers and workers, not just within the UK but throughout the EU27. 

Chris Deacon is a partner at Stewarts, London. Sarah Prager is a barrister at 1 Chancery Lane, London

This article was first published in the Law Society Gazette, 21st June 2021

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