Impact of Brexit on the recognition and enforcement of English judgments in Switzerland

The Lugano Convention is a multilateral treaty on jurisdiction, recognition and enforcement of judgments between the member states of the European Union, Switzerland, Norway and Iceland, which became effective at the end of 2007 and has since been revised. The Lugano Convention applies in civil and commercial law matters. Its purpose is to ensure that judgments handed down by courts in other member states are recognized and enforceable according to unified rules in other member states.

The United Kingdom, as a member of the European Union, is a member state of the Lugano Convention. After its withdrawal from the European Union (Brexit), the United Kingdom will no longer be bound by the Lugano Convention. Switzerland and the United Kingdom are currently not both member states of any other bilateral or multilateral treaty concerning the same subject matter. Consequently Swiss courts will only recognize and enforce judgments of United Kingdom courts pursuant to the provisions of the Swiss Federal Act on Private International Law (PILA). The judgments of Swiss courts will on the other hand only be recognized and enforced pursuant to the corresponding provisions in the laws of the United Kingdom.

After the Brexit, the recognition and enforcement of foreign judgments in Switzerland under the provisions of the PILA (and vice versa) will be subject to different requirements, which may be disadvantageous as compared with  the current regime under the Lugano Convention. Under the Lugano Convention, Swiss courts are generally not authorized to review the jurisdiction of the courts of other member states. Under the provisions of the PILA, foreign judgments can only be recognized and enforced if the foreign court had jurisdiction over the dispute according to the rules set out in the PILA. These rules can in certain cases prevent the recognition and/or enforcement of judgments which would otherwise be enforceable under the Lugano Convention. Moreover, the Lugano Convention allows for the recognition and enforcement of all judgments which are enforceable in the state where the judgment was issued; under the PILA, judgments must be final (i.e. if no appeal is possible) in order to be enforceable.

This can have consequences not only for future procedures, but – more importantly – also for procedures which are already pending before the courts of Switzerland and/or the United Kingdom. A claimant who initiated an action in one of the two countries in reliance on the enforceability of a judgment in the other country pursuant to the Lugano Convention could possibly no longer be able to enforce such a judgment pursuant to the PILA. Also the provisions concerning litis pendens (the concept that the initiation of a court action with respect to a specific claim bars the same claimant from initiating a second action with respect to the same claim against the same party before a different court) differ between the Lugano Convention and the PILA, with the consequence that an action which was initiated in reliance on the regime under the Lugano Convention could be in conflict with the concept of litis pendens as provided for in the PILA – therefore also ultimately preventing the recognition and/or enforcement of the judgment.

At present, it appears likely that the United Kingdom will rejoin the Lugano Convention. The government of the United Kingdom has indicated that this could be the case even in a "no deal" Brexit scenario. The United Kingdom will, however, be required to apply to rejoin the Lugano Convention. The application must then be accepted by the European Union and the other member states of the Lugano Convention. Another possibility would be for the United Kingdom to join EFTA. However, political difficulties and delays in these procedures are inevitable, especially in a "no deal" Brexit scenario. In the near future it is therefore more than advisable to consider the recognition and enforcement of an English judgment under the provisions of the PILA before such proceedings are initiated and to seek advice with respect to proceedings which have already been initiated before the courts of Switzerland or the United Kingdom in view of later enforcing these judgments in the other country.