With less than 6 weeks remaining, time is running out to enforce obtained judgments under Recast.
This article is based on the assumption that the UK will leave the European Union on 31 October 2019 ("exit day") without a deal. Those Member States forming the European Union after exit day are referred to as "EU27".
With 6 weeks remaining until the UK is due to leave the European Union, the prospects of immediate and sweeping changes to longstanding agreements in the event of no-deal become ever more apparent.
We have recently written extensively on the expected issues in respect of enforcement of judgments obtained in proceedings commenced after exit day (or the expiry of any Transition Period).
But what of those judgments already obtained in the English courts where enforcement is sought in a EU27 Court?
There is the prospect of some debtors in EU27 Member States, including European insurers, taking the view that there may be value in waiting out paying creditors holding English judgments until after 31 October 2019. At that stage, they will be able to consider creditor appetite for enforcing judgments should the insurer not pay, and the creditors faced with new obstacles.
However, such a strategy is not risk-free for those insurers.
Should a Withdrawal Agreement be agreed (followed by the accompanying Transition Period) or an extension to Article 50 be agreed then those judgments may be still enforced as currently (see below); the UK's departure would effectively be suspended until the end of the relevant period.
If the UK does leave without a deal, these judgments remain enforceable, they will simply be subject to the contingency position of creditors relying on EU27 Member State's national enforcement rules.
For those insurer debtors who are looking to wait, they may be subject to the additional costs incurred by the creditor in taking those additional steps to enforce, and we would recommend they seek advice on the implications of this.
What is the position now?
Currently, those creditors who obtain an enforceable judgment in the English courts will be able to enforce it in EU27 Member States and vice versa. The system of judicial co-operation provided for by the Recast Brussels Regulation, states:
"A judgment given in a Member State and enforceable in that State shall be enforced in another Member State when, on the application of any interested party, it has been declared enforceable there."
The term 'judgment' includes costs orders, interim orders, and in some circumstances, default judgments.
However, what happens post exit day?
For its part, the UK Government laid The Civil Jurisdiction and Judgments (Amendment) (EU Exit) Regulations 2019 earlier this year, proposing to recognize and enforce civil and commercial judgments from EU27 Member States under the Brussels Regime. This is provided that the judgments were given in proceedings that commenced before exit day, and that a certificate from the issuing Court, setting out its enforceability and substance, should be served on the debtor.
As we have set out, the position for creditors holding English judgments looking to enforce in EU27 Member States is a little bit more nuanced. Obtaining a judgment prior to exit day is not enough. The European Union's January Notice to Stakeholders clearly sets out the intended stance of the EU27.
In short, any creditors with an English judgment need to conclude their enforcement action in the appropriate EU27 Member State before exit day. As stated, this principle will apply even where:
- the judgment was handed down before the withdrawal date, or;
- the enforcement proceedings were commenced (not concluded) before the withdrawal date.
To reiterate the above, if the enforcement action is not concluded prior to exit day, those creditors seeking to enforce an English judgment will need to consider specific local law advice on the mechanisms of enforcement in the relevant EU27 Member State in order to determine the nature and detail of the procedural steps that will likely exist, or whether or not the Hague Convention will apply (we again refer you to our extensive piece here).
This article was authored by Craig Evans, Senior Associate.