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FROM THE BLOG

The impact of Brexit on the enforcement of English judgments in Switzerland

Posted by on 7 March 2019

The 2007 Lugano Convention on the Recognition and Enforcement of Judgments in Civil and Commercial Matters currently forms the basis for the reciprocal enforcement of judgments between the member states of the European Union and three countries of the European Free Trade Association (EFTA) (Switzerland, Norway and Iceland). The Lugano Convention is in essence the equivalent of the Brussels I Regulation of 2001.

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It is important to note that the United Kingdom has not ratified the Lugano Convention itself but is bound by it due to it being a member of the EU. As a consequence of leaving the EU at the end of March 2019, the UK will no longer be bound by the Lugano Convention. Therefore, even the potential execution of a withdrawal agreement with the EU would not prevent the UK's exclusion from the Lugano Convention.

Switzerland and the United Kingdom have recently signed a number of agreements with the aim to regulate their bilateral relations post Brexit but none of the agreements cover the judicial realm in general and the reciprocal enforcement of judgments in particular.[1] The United Kingdom has also deposited its Instrument of Accession to the 2005 Hague Convention on Choice of Court Agreements which will enter into effect on 1 April 2019, but as Switzerland is not a party to the Convention the solution to any difficulty in enforcing an English judgment in EU member states would not be available in Switzerland.

This means that in the event that the UK does not re-join the Lugano Convention post Brexit, English judgments would after Brexit be treated in Switzerland like judgements of any other third party state, as a result of which the Swiss exequatur procedure will apply: Swiss courts will apply Swiss domestic conflict of law rules to the recognition and enforcement of an English judgment, namely the Federal Act on Private International Law (the "PILA").

The enforcement process for judgments under the PILA is longer and not as simple as under the Lugano Convention and may have negative consequences for claimants and defendants alike. For claimants wishing to enforce their court decision in Switzerland, the grounds for resisting recognition of a foreign judgment are wider under the PILA than under the Lugano Convention. Under the Lugano Convention Swiss courts are generally not entitled to review whether the court of a member state had jurisdiction over the defendant. According to the PILA, foreign judgments may only be recognised and enforced if the foreign court had jurisdiction over the dispute pursuant to the rules set out in the PILA. Furthermore, under the PILA a judgment must be final to be enforceable which means that foreign preliminary decisions (i.e. subject to appeal) are generally not enforceable under the PILA. The situation is different under the Lugano Convention which does not limit the remedies that can be enforced. Further, defendants will no longer benefit from the improved defence available under the Lugano Convention against so-called torpedo claims. In order to avoid a court proceeding in English courts, a quick acting party could successfully initiate court proceedings outside the United Kingdom and seek a negative declaratory judgment simply to prevent the other party from filing its intended claim in England. In the past, courts have granted interim orders against such torpedo claims but this possibility would likely cease to apply under the PILA.

As regards to timing, the Lugano Convention will likely continue to apply to the enforcement of English judgments rendered on or before 29 March 2019. The enforcement of English judgments rendered after this date, even if the proceedings were initiated before, will be governed by Swiss domestic law, i.e. the PILA.

The UK government has previously indicated that it will seek to re-join the Lugano Convention after Brexit, including in a "no-deal" Brexit scenario. However, the UK will need to apply and will only be invited to become a party to the Lugano Convention if the other contracting parties, including the EU, unanimously agree or if the UK becomes a member of the EFTA. In the event of a "no-deal" Brexit it is unlikely that a conclusion will be reached and delays and complications with regards to the enforcement of an English judgment in Switzerland post Brexit are to be expected. In any event, litigators are advised to verify the enforceability of an English judgment before commencing litigation in a case with an Anglo-Swiss element, in particular the validity of a jurisdiction clause.


[1]    To this date Switzerland and the UK have signed an agreement on citizens' rights, a Trade Agreement, an Insurance Agreement, a Road Transport Agreement and an Air Transport Agreement. 

 

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Topics: Litigation

  
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Marcel C. Steinegger

Marcel has over 20 years of litigation and trail experience in a variety of mainly international but also domestic commercial and corporate cases including representing individuals and companies in regulatory enforcement proceedings. His practice also includes representing clients in criminal matters, mainly white-collar crime cases. He has in-depth experiences in cross-border litigation and international judicial assistance issues in civil and criminal matters, particularly in asset recovery, repatriation of assets and being expert in foreign proceedings. Many of Marcel's clients have required his assistance regarding compliance, particularly anti-corruption and anti-money laundering issues, and other corporate, commercial or regulatory concerns. Long-term mandates as a board member including one of a bank provide him with the practical experiences on strategical and entrepreneurial topics. Marcel has been a partner since 2001 and obtained his law degree from the University of Zurich in 1988 and his post-graduate degree from the University of San Diego (LLM) in 1998. His working languages are German and English. Marcel is a member of the Zurich Bar Association.

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Dunja Koch

Dunja Koch has expertise in all aspects of corporate and finance law, advising mainly UK and US clients with regard to Switzerland. She is the managing partner of the London office. She joined the firm in 1998 and became a partner in 2003. She regularly works on corporate and M&A deals, as well as leveraged and acquisition finance transactions, but also project, commodity and asset finance matters, including aircraft finance. Here, she acts on behalf of aircraft manufacturers, banks and leasing companies in relation to the Swiss aspects of acquisition of aircraft and engines. Her practice further covers regulatory matters, where she advises asset managers, funds, securities dealers and other financial institutions in relation to their cross-border activities in Switzerland. The Legal 500 United Kingdom 2017 recommended her as a top foreign lawyer in London. Chambers Global (2018) ranked her as leader in the fields of Banking & Finance (Switzerland) and Banking & Finance (UK). She was also specifically recommended in the 2018 edition of the Legal 500 EMEA for Transport Law matters and named one of IFLR1000’s Women Leaders- an elite cohort of the 300 leading female transactional experts in local markets globally. She is the only practitioner from Switzerland to be featured in the guide. Dunja Koch holds a law degree from the University of Zurich and a LL.M. from Queen Mary, University of London. She qualified in Geneva in 1997 and in England and Wales in 1999. She speaks German, French, English and Italian. She is registered on the roll of attorneys in Zurich and a member of the International Bar Association (IBA), Association Suisse de Droit Aérien et Spatial and the Aviation Club of the UK.

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Andrea Trost

Andrea's practice focuses on banking & finance and on corporate and commercial transactions. She also advises on employment law matters. Andrea joined our London office as an associate in 2017. Prior to joining Froriep she trained with a business law firm in Zurich and worked in the compliance department of a commercial bank. She graduated from the University of Zurich in 2014 and earned an LL.M. in international finance law from King's College London. She was admitted to the Zurich bar in 2017. Her working languages are German and English and she has a good command of French.

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