In a step that many will see as wishful thinking, the UK government laid new legislation before Parliament on 10 November 2020 which would see the UK remain a party to the Lugano Convention after 31 December 2020.
Continued Lugano Convention membership is an important component of the UK achieving a smooth post-Brexit transition. If a dispute arises between individuals or businesses based in different countries, you need a set of rules for determining which country’s court should decide legal claims and a system for allowing Court judgments to be enforced in other countries. The Lugano Convention agreed by EU Member States and Iceland, Norway and Switzerland provides such a set of rules.
Currently, the UK remains a party to the Lugano Convention until 11pm on 31 December 2020 under the Withdrawal Agreement. What happens next is unclear.
The UK has applied to be readmitted as an independent state from 1 January 2020. So far, Iceland, Norway and Switzerland have agreed the UK’s application. The EU have not. Without all parties agreeing, the UK will not be admitted.
The EU needed to accept the UK’s application by 1 October 2020 for the UK to be admitted by 1 January 2021 under usual Lugano Convention procedures. That did not happen and the new UK legislation seeks an “accelerated consideration” of the UK’s application. The ball is firmly in the EU’s court and, no doubt, the EU’s final decision is tied up in the ongoing trade negotiations.
The UK government’s assessment of what happens if its application is refused makes sombre reading.
“In the absence of the Convention, there would result a lack of legal certainty and higher costs for those involved in cross-border civil and commercial disputes, and an increased complexity and cost of proceedings to both litigants and the courts. Citizens and businesses would lose confidence in interacting across borders due to a lack of certainty around which country’s court would deal with any dispute and without knowing that judgments and orders obtained in one country would be recognised and enforced in the courts of other [Lugano Convention countries]”.