The UK Trade and Cooperation Agreement of 24.12.2020
After long negotiations, the UK Trade and Cooperation Agreement between the EU member states and the United Kingdom entered into force on 01.01.2021. The agreement creates an economic partnership between the EU member states and the UK, so the agreement makes many international trade arrangements between the UK and EU member states. In particular, it regulates:
- Fairer competition in the areas of state aid, consumer protection, worker protection, and the environment and climate change.
- Free trade, tariffs and quotas will be abolished.
- International services, professional qualifications, public procurement, air, sea and rail freight transport, social security and research and development.
- The close security partnership for future cooperation on justice.
- The mutual exchange of data, such as air passenger data or criminal records.
In principle, the new agreement is advantageous for all those concerned, because when the transitional phase ends on 31 December 2020, the United Kingdom may no longer apply the regulations of the European Union. The regulations in the UK Trade and Cooperation Agreement create transparency in international trade. However, this Agreement, also has gaps.
In the UK Trade and Cooperation Agreement, the United Kingdom has not regulated how judgments from the United Kingdom are to be enforced within the European Union – and thus also in Germany – from 1 January 2021 (and vice versa).
Enforcement and Recognition of UK Judgments in Germany until 31.12.2020
Until 31.12.2020, the rules on the recognition and enforcement of judgments from the United Kingdom in Germany and vice versa were governed by the Regulation of 12 December 2012 (EUGVVO). The Regulation includes rules on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (“Brussels Ia Regulation”). According to Article 36(1) of the Brussels Ia Regulation, judgments given in one Member State are recognised and enforced in the other Member States without the need for special proceedings or a declaration of enforceability by the German court.
The enforcement and recognition of judgments in proceedings commenced before 31 December 2020 will continue to be governed by the Brussels I Regulation (Art. 67(2) of the Withdrawal Agreement). Thus, it is the date of commencement of the legal proceedings that matters, not the date of the judgment.
Post-Brexit: Enforcement and Recognition of UK Judgments in Germany since 01.01.2021
Since 01.01.2021, the Brussels I Regulation no longer applies in proceedings between the United Kingdom and Germany. A direct procedure for the enforcement and recognition of judgments was not regulated in the UK Trade and Cooperation Agreement.
The following describes how to proceed with the enforcement and recognition of UK judgments in Germany (and vice versa) from 01.01.2021:
Accession to the Hague Convention on Choice of Court Agreements
Subject to there being no agreement by the end of the transitional period, the UK acceded to the Hague Convention on Choice of Court Agreements of 30 June 2005 (HGÜ) on 1 April 2019.
The UTCCC obliges the contracting states to recognise the choice of court agreements between merchants and to enforce and recognise judgments issued based on such agreements in a simplified procedure.
For Germany, such a procedure is regulated in the Act on the Execution of Intergovernmental Recognition and Enforcement Treaties in Civil and Commercial Matters (AVAG). At the creditor’s request, the regional court orders the issuance of an enforcement clause for the foreign judgment. The debtor is not heard on this, and no separate judgment is required in Germany for recognition and enforceability.
The Exequatur Procedure
If the parties are not merchants or have not agreed on a place of jurisdiction, the enforcement of UK judgments in Germany must follow a separate court procedure. A German court must determine the admissibility of the enforcement of the British judgment separately in its own enforcement judgment (so-called exequatur procedure).
The Convention of 14 July 1960 between the Federal Republic of Germany and the United Kingdom on the Mutual Recognition and Enforcement of Judgments will probably be used for this purpose. The agreement contains regulations on the enforcement and recognition of judgments in civil and commercial matters for the payment of a certain sum of money. For any other judgment from the UK, the German courts are therefore likely to apply the general rules of the German Code of Civil Procedure for the recognition and enforcement of judgments (§ 328 ZPO). These also provide for the necessity of exequatur proceedings.
For the enforcement of German court judgments in the United Kingdom, the British procedural rules will apply.
Brussels Convention (1968)
The European Convention on Jurisdiction and the Enforcement of Judgments of 1968 (1968 Brussels Convention), which used to apply between EU Member States, could again apply. The Brussels Convention is a predecessor of the Brussels Regulation. Enforcement would then be executable without further proceedings. Whether the Brussels Convention will actually be applied, however, is unclear and unlikely.
Accession to the Lugano Convention
The United Kingdom could accede to the Lugano Convention of 2007 (LugÜ). Among other things, the Lugano Convention regulates the enforcement of judgments in civil and commercial matters between EU member states as well as Iceland, Norway and Switzerland. This requires that the UK accede to the European Free Trade Association (EFTA) or that all contracting parties, including the EU, agree to its application. Such accession and EU consent is unlikely in practice.
It is possible to agree on arbitration. Here, the enforcement and recognition of foreign arbitral awards is governed by the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 10 June 1958 (New York Convention), which has since been ratified by 157 states, including Germany and the United Kingdom.
After the end of the transitional period, arbitration proceedings in the UK could again be secured by “anti-suit injunctions” after the European Court of Justice ruled that these are incompatible with the EuGVVO. However, the Brussels Regulation will no longer apply to the UK upon withdrawal. “Anti-suit injunctions” are injunctions issued by courts in common law states to stop proceedings in other states. An anti-suit injunction can be sought against the plaintiff party, with the aim of withdrawing the action abroad.
Commercial Court, Brexit and the Enforcement and Recognition of UK Judgments in Germany
The Commercial Court was established on 1 November 2020 at the Stuttgart and Mannheim locations to increasingly bring major commercial disputes in Germany before state civil courts again. It will be possible to conduct the proceedings in English to a large extent so that an international factual reference of the dispute can also be handled in the proceedings and the Baden-Württemberg judiciary can represent a real alternative to foreign courts or even private arbitration.
Conclusion: How are UK Judgments Enforced and Recognised in Germany Post-Brexit
As a result of Brexit, there are clear ambiguities in international civil procedure. Since the agreement of 24 December 2020 is incomplete in international civil procedure and particularly in the enforcement and recognition of judgments between the United Kingdom and the EU member states, national procedural law instruments must be applied. This makes civil proceedings complex for all parties involved. Especially for private individuals, the challenges involved are difficult to cope with.
The new legal situation challenges strategic procedural management. For example, merchants could consider concluding a choice-of-court agreement in the spirit of the Hague Convention on Choice of Court Agreements, so that at least direct enforceability between companies can be secured. Alternatively, international arbitration law offers itself as viable, so that the conclusion of an arbitration agreement is also recommended.