Brexit and its implications to the application of the Lugano Convention from a Swiss perspective

This article will address some transitional legal issues concerning the applicability of the Lugano Convention on Jurisdiction, Recognition and Enforcement of Judgements in enforcement proceedings in Switzerland after Brexit.

Brexit describes the withdrawal of the United Kingdom (UK) from the European Union (EU) on 31 January 2020. The Lugano Convention is an international treaty that was concluded in 2007. It governs jurisdiction and the recognition and enforcement of judgments in civil and commercial matters. The scope of the Lugano Convention extends to EU states by virtue of their EU membership, as well as for individual non-EU states such as Switzerland, which have ratified the Lugano Convention. There was a transition period agreed upon between London and Brussels after Brexit, where the Lugano Convention would still apply to achieve a softer transition.

Eleven months after the UK's exit from the EU, the transition period expired on 31 December 2020. The UK has left the EU single market and the EU customs union, and international agreements of the EU in principle no longer apply to the UK. This includes the Lugano Convention, as the UK had never independently ratified the Lugano Convention.

It is questionable whether, despite the de facto end of the transitional period, the Lugano Convention still applies to Swiss enforcement proceedings concerning judgments from the UK that were issued before 31 December 2020. If this were no longer the case, Swiss courts would apply the lex fori and thus the Swiss International Private Law Act as national law instead of the Lugano Convention as an international treaty.

The Lugano Convention does not expressly provide for the case in which a state is no longer a party to it. The majority of Swiss doctrine (instead of many see reasoning in BGer 5A_697/2020 E. 6.1.2.) and theSwiss Federal Office of Justice are of the opinion that a declaration of enforceability after the 31 December 2020 of a judgment issued during the membership of the UK and thus applicability of the Lugano Convention continues to be subject to the Lugano Convention. This follows from the general principles of international and civil procedural law(droits acquis, non-retroactivity and legal certainty) and also underlies Article 63 Lugano Convention, which can be applied as a transitional provision. Article 63(1) Lugano Convention provides two requirements for the Lugano Convention to apply to a request for recognition:

  • The Lugano Convention should have been applicable in the State where and at the time the judgment was rendered, and

  • the Lugano Convention should be applicable in the State of requested recognition at the time the recognition was filed.

However, on 24 February 2021, contrary to above mentioned opinions, the District Court of Zurich has refused the application of the Lugano Convention on a request concerning the declaration of enforceability. It concerned a judgement of the High Court of Justice of London from September 2020. The district court of Zurich reasoned that the transition period for the applicability of the Lugano Convention ended on 1 January 2021 and thus the request for declaration of enforceability, filed on 18 February 2021, could not be based on the Lugano Convention but it should be based on the Swiss International Private Law Act (Judgment of the district court of Zurich on 24 February 2021, consideration 2.2, published on arrestpraxis.ch). This decision was criticized, because the court failed to recognize Article 63 Lugano Convention (see Rodrigo Rodriguez, Professor on Insolvency Law at the University of Lucerne, "Swiss Court Refuses Post-Brexit Application of the Lugano Convention - Even Good Cases Can Make Bad (Case) Law").

On 22 March 2021, the appeal proceedings of a case concerning the recognition and enforcement of a judgment of the High Court of Justice of England and Wales from October 2020 took place before the Swiss Supreme Court. The Appellant submitted that the recognition and enforcement must be decided under the rules of the Swiss International Private Law Act instead of the Lugano Convention.

The Swiss Supreme Court decided on the issue in the scope of this particular case and argued in the same direction as the prevailing doctrine and the Federal Office of Justice, in our opinion implicitly correcting the District Court of Zurich in doing so. According to the Swiss Supreme Court, the Lugano Convention continues to apply to the present appeal proceedings of a judgment rendered before 31 January 2020 (Brexit), provided that the previous rest of the procedure on the cantonal level has taken place entirely under the Lugano Convention before 31 December 2020 (BGer 5A_697/2020 from 22 March 2021, consideration 6.1.2.). This decision is an important case, as it is the first time the Swiss Supreme Court has expressed on this topic. The Swiss Supreme Court did not state its opinion on this topic in general though but did only decide yet on this specific case.

In the aftermath of the Swiss Supreme Court decision as a leading case for lower courts, it can be summarised as follows: After 31 December 2020, the Lugano Convention most likely continues to apply, if

  • the judgement was rendered in the UK before 31 January 2020 (before Brexit) and if the previous proceedings on the cantonal level were filed and completed before the end of 31 December 2020. This was the decision of the Swiss Supreme Court of BGer 5A_697/2020 from 22 March 2021.

The Swiss Supreme Court has not yet clarified though, as to whether the Lugano Convention continues to apply to

  • a judgment that was rendered in the UK before Brexit, if the previous enforcement proceedings were filed but not completed before the end of 31 December 2020 (in the opinion of the Swiss Federal Office of Justice the Lugano Convention would apply);

  • a judgement that was rendered in the UK in the transitional period and if the enforcement proceedings were filed, but not completed before the end of 31 December 2020;

  • a judgement that was rendered in the transitional period, but the enforcement proceedings were filed after 31 December 2020.

It is in our opinion not to be expected that the Lugano Convention applies to a judgement of a UK court that was rendered after 31 December 2020 and thus filed for enforcement procedure after 31 December 2020.

We will eagerly await further decisions on this issue by the Swiss Supreme Court. If you have any questions on the subject, please do not hesitate to contact Dr. iur. Hans Kuhn or Dr. iur. Cheyenne Durrer.

Procedural lawKim NguyenWicki Partners AGlugü, brexit, lugano convention