Effective from 31 December 2020, the UK is no longer a party to the Brussels Recast Regulation ("Brussels Recast") which governed the cross-border recognition and enforcement of judgments between the UK and EU Member States, including Ireland. Brussels Recast essentially enabled the almost automatic enforcement of judgments between the two jurisdictions.

As the EU-UK Trade and Cooperation Agreement (the "Brexit Agreement") does not cover the mutual recognition and enforcement of judgments, from 1 January 2021, cross-border enforcement of judgments between the two jurisdictions will be governed by either the 2005 Hague Convention on Choice of Court Agreements (the "Hague 2005") or local common law rules on jurisdiction.

As a result, there will likely be increased challenges, delays and costs for a party seeking to enforce a UK judgment in Ireland, and potentially vice-versa. Given in particular the close linguistic, cultural, legal and, of course, geographical proximity between Ireland and Northern Ireland (being part of the UK) on the island of Ireland, it is inevitable that issues of this nature will arise on this island over the months and years to come.

When will Hague 2005 apply?

Hague 2005 applies in cases involving contracts containing an exclusive jurisdiction clause that was entered into after Hague 2005 came into force in the country chosen in the clause.

An exclusive jurisdiction clause provides that only the courts of one jurisdiction, as specified in the clause, will have jurisdiction to hear any disputes arising from the contract.

A word of caution here, there is a difference of opinion between the UK and the EU as to the relevant date for this purpose in the case of jurisdiction clauses where the UK is the chosen country.

The UK acceded to Hague 2005 in its own right in September 2020. Prior to this, and from 1 October 2005, the UK was a party to Hague 2005 by virtue of its EU membership.

It is the EU's position that Hague 2005 will only apply in the case of UK exclusive jurisdiction clauses entered into after 1 January 2021. Whereas, the UK says that Hague 2005 is applicable to UK exclusive jurisdiction clauses entered into after 1 October 2015.1

At present, uncertainty prevails as to how the Irish courts will seek to apply Hague 2005 for contracts entered into after 1 October 2015. We believe that it is more likely, given the EU's position, that the Irish courts will only apply Hague 2005 with respect to UK exclusive jurisdiction clauses entered into after 1 January 2021. It is also important to note that Hague 2005 has other subject matter limitations, and these include that it will not facilitate parties when seeking to enforce interim remedies, including those obtained by way of interim injunctions (for example, an interim freezing order). Exclusive jurisdiction clause contracts to which a consumer is a party are also excluded. There are also wider grounds for refusing enforcement than Brussels Recast, which are not explored in this article.

Unilateral Clauses

Uncertainty also continues to prevail with respect to the enforcement of unilateral jurisdictional clauses (also referred to as hybrid or asymmetric clauses); such clauses are frequently used in loan agreements and other finance documents, providing that borrowers may only institute proceedings in the chosen court, and giving the lender the option to bring proceedings in the chosen court or "in any other court of competent jurisdiction" for example. The UK's position is that Hague 2005 also applies to unilateral clauses, but the EU disagrees with this position. As such this is yet another area where the courts will inevitably have to intervene and determine the issue locally, at least.

Order 42D of the Rules of the Superior Courts (the "RSC")

Where Hague 2005 is applicable, a UK judgment can be enforced in Ireland by way of an application to the Master of the High Court under Order 42D of the RSC, by an ex parte motion, without notice to the party against whom the order is being enforced. The application must be on sworn affidavit which will include details of:-

  • whether the UK judgment provides for the payment of a sum of money, and if so, the sum;
  • whether any damages awarded by the UK judgment include exemplary or punitive damages;
  • the grounds on which the right to enforce the UK judgment is vested in the applicant; and
  • confirmation that the judgment has not been satisfied, or not fully satisfied and the part / amount which remains unsatisfied.

The affidavit also requires the core documents being relied upon being exhibited to the court, and these will normally include:-

  • a certified copy of the UK judgment;
  • an original or certified copy of the exclusive jurisdiction clause;
  • if the UK judgment was given in default, the original / certified copy of a document evidencing that the defaulting party was on notice; and
  • any document necessary to show that the UK judgment has effect or is enforceable in the UK.

An enforcement order granted will also provide notice of a limited period for seeking an appeal; this will be clear on the face of the enforcement order granted, and must be served upon the party against whom it is made. If an appeal is not brought within the prescribed time period the ability to challenge the judgment will fall away.

When will Irish common law rules apply?

Irish common law rules will apply to all contracts containing a non-exclusive jurisdiction clause and to other agreements falling outside the scope of Hague 2005.

A non-exclusive jurisdiction clause will normally say that any dispute arising out of the contract shall be heard in the courts of a particular jurisdiction but with a usual carve out that this is without prejudice to the right of either any of the parties to commence the dispute in another jurisdiction, if appropriate.

Under the common law procedure a UK judgment will be deemed to create a contract debt, therefore, fresh legal proceedings are required in order to enforce the UK Judgment in Ireland.

Where a defendant is not be resident in Ireland but there are or may be assets located in Ireland, an application to the High Court for leave to issue and serve proceedings outside the jurisdiction under Order 11 of the RSC will be required.

To enforce a UK judgment under Irish common law, the UK judgment must comply with the following prerequisites:-

  • the judgment must be for a definitive sum, and therefore only monetary judgments may be enforced;
  • the judgment must be final and conclusive, which means it must be final and unalterable by the court that pronounced it. If an appeal is pending in the UK, a judgment may still be considered final and conclusive, unless the appeal has the effect of staying the judgment; and
  • the judgment must be given by a court of competent jurisdiction.

At common law the Irish courts have discretion as to whether to recognise foreign judgments or not. As detailed above, the Irish courts can refuse recognition and enforcement of foreign judgments if certain principles are not present, for example if there are concerns in relation to Irish public policy.

The 2007 Lugano Convention

The above highlights some of the challenges and obstacles potentially facing a party seeking to enforce a UK judgment in Ireland under either Hague 2005 or the Irish common law. Those obstacles may be avoided if the UK's application to accede to the 2007 Lugano Convention ("Lugano 2007") is granted. The enforcement procedures under Lugano 2007 are more straightforward and similar in many ways to Brussels Recast. The UK applied to re-accede to Lugano 2007 in its own right in April 2020 and requires the unanimous agreement of the contracting parties which includes the EU. The EU decision is pending.

And what about Irish judgments in the UK, including Northern Ireland?

Many of the considerations outlined above also apply in this instance.

If for example Irish proceedings were issued on or before 31 December 2020, then enforcement in the UK, to include Northern Ireland, would be governed by Brussels Recast, by virtue of the Civil Justice EU Exit Regulations (as variously amended).

For claims issued after 31 December 2020, Brussels Recast will not apply. If a claim is subject to an exclusive jurisdiction clause, the party seeking to enforce in the UK may instead be able to rely on Hague 2005. As noted above, this requires the courts of signatory states to uphold exclusive jurisdiction clauses and to enforce the resulting judgments. As explained above, Hague 2005 applied to the UK before Brexit via the UK's membership of the EU. The UK, however, acceded to Hague 2005 in its own right at the end of the Brexit implementation period (although there is doubt over Hague 2005's application to UK jurisdiction clauses that pre-date this new membership). The UK's position is that Hague 2005 is applicable to UK exclusive jurisdiction clauses entered into after 1 October 2015, so it will be interesting to see how UK courts interpret this position. If a claim is outside the scope of Hague 2005, then the party in question will have to rely on the domestic law of the country involved.

In relation to unilateral, or asymmetrical jurisdiction clauses, the UK's position is that Hague 2005 also applies to unilateral clauses, but the EU disagrees with this position. As noted above, this is yet another area where the courts will inevitably have to intervene and determine the issue locally.

The points made above in relation to how common law may apply questions of jurisdiction, and also the issues in relation to Lugano 2007, are substantially similar from a UK point of view.

What now?

The Brexit Agreement fails to deal with the mutual recognition and enforcement of judgments. As a result, there is still considerable uncertainty for parties seeking to enforce UK judgments in Ireland, and vice versa. While Hague 2005 will be helpful where applicable, there will be many occasions where it will not assist and the only remedy available to the party with the benefit of the UK judgment will be under Irish common law (or vice versa). This will likely result in an increased risk of challenges, and increased delays and costs for an applicant.

For future contracts post Brexit it is increasingly important that parties who may wish to have UK based judgments capable of enforcement in Ireland ensure that the contract contains an unambiguous exclusive jurisdiction clause so as to avail of the procedures under Hague 2005. Also, parties should consider amending existing contracts to include an unambiguous exclusive jurisdiction clause, where possible.

In the meantime, we will wait with interest for the EU's decision on the UK's accession to Lugano.

Footnote

1. While Hague 2005 was concluded in June 2005, it only came into force on 1 October 2015.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.