Jurisdiction and enforcement of judgments post-Brexit: An update

On 31 December 2020, the Brexit transition period ended and the United Kingdom was no longer party to the Lugano Convention of 2007, which governs issues of jurisdiction and enforcement of judgments between its signatories: the EU member states as well as Norway, Iceland and Switzerland.

The UK and Norway have now signed a new agreement on the recognition and enforcement of judgments in civil cases, however, jurisdictional questions are once again governed by national law. Wikborg Rein has a strong presence in both jurisdictions, and in this newsletter we summarise how judgments will now be enforced and jurisdictional issues determined in cross-jurisdictional disputes in civil cases that involve the two countries.

On 08 April 2020, the UK Government applied for the UK to rejoin the Lugano Convention as an independent contracting state; a process supported by Norway. However, before accession can take place, the contracting parties must agree to the UK joining the convention. In late 2020, it was unclear whether the European Union would support the UK's accession to the Lugano convention. Accordingly, on 13 October 2020, the UK and Norway signed a separate agreement ensuring continued recognition and enforcement of civil judgments between the two countries. Pursuant to this agreement, the bilateral convention between Norway and the United Kingdom of 12 June 1961 regarding reciprocal enforcement of judgments will continue to apply with certain amendments. Since the enter into force of the previous Lugano Convention of 1988, the 1961 convention has had limited application since 2009, since both the Lugano Conventions took precedence within their scope. The 1961 convention has now been revitalised with effect from 1 January 2021, and will make sure that civil judgements can be recognised and enforced between the two countries.

However, Norway and the UK have made no separate agreement on jurisdiction, meaning that this will now be governed by national law (although the Lugano Convention will still to a certain degree apply for proceedings commence in Norway and for all proceedings instituted prior to 1 January 2021).

Norwegian legislation on international jurisdiction

Pursuant to Sections 19-16 and 18-1 of the Norwegian Dispute Act, UK judgments will continue to be enforced in Norway.

For cases with a sufficient connection to the geographic scope of the Lugano Convention, the latter will still govern jurisdiction in Norway. However, concerning cases with purely a UK and Norway connection, the question before a Norwegian court as to whether the UK or Norwegian courts have jurisdiction in a particular case will now be governed by Section 4-3 of the Dispute Act:

"Disputes in international matters may only be brought before the Norwegian
courts if the facts of the case have a sufficiently strong connection to Norway."

This assessment depends to a large extent on whether a national venue in Norway can be established pursuant to the internal rules on jurisdiction in Sections 4-4 and 4-5. While these internal rules on jurisdiction in most cases will give the same conclusion as under the Lugano Convention, the situation will in several regards be different after 1 January 2021.

First, Norwegian jurisdiction pursuant to Section 4-3 will still depend on a broader assessment of the facts. This is illustrated by the hallmark decision in Rt-1998-1647-A, where Norwegian courts refused jurisdiction, although Norwegian courts were the correct venue. Defendants may therefore also to a certain extent invoke arguments based on forum non conveniens, meaning that another jurisdiction is more appropriate, which is not possible under the Lugano Convention.

Second, while the provisions on national venue in Section 4-4 and 4-5 of the Dispute Act are based on the Lugano Convention, there are also important differences: Certain cases may have been subject to Norwegian jurisdiction pursuant to the Lugano Convention, while not being covered by the parallel provisions in Section 4-4 and 4-5, and vice versa. For instance, pursuant to Section 4-5 (1) of the Dispute Act, proceedings may be instituted where immovable property is situated. Under Article 22 of the Convention, a similar jurisdiction is exclusive. By way of example, the Convention also has a separate set of rules for matters relating to insurance, which differs from those of Section 4-5 third and ninth paragraph.

Third, Section 4-3 also entails a different approach to accumulating claims in a joint hearing. Such accumulation has proven highly relevant in recent years, as demonstrated in the Volvo and Stolt decisions from the Norwegian Supreme Court where the claimants were able to accumulate claims against third-parties who would not normally be subject to Norwegian jurisdiction (see HR-2019-2206-A and HR-2018-869-A, where Wikborg Rein in both cases acted for the defendants). This is possible in Norwegian law suits, pursuant to Section 15-2 of the Dispute Act, and also pursuant to Article 6 (1) in international matters governed by the Lugano Convention. However, there is no legal basis for accumulating different international claims pursuant to Section 4-3 of the Dispute Act: each claim must itself fulfil the requirements for Norwegian jurisdiction.

Jurisdictional issues in cross-border disputes between the UK and Norway may therefore be assessed quite differently in the time to come, at least until the UK joins the Lugano Convention.

The situation in the UK

The agreement between the UK and Norway has had effect in domestic law since 11pm on 31 December 2020 and is implemented by an Order in Council made under the Foreign Judgments (Reciprocal Enforcement) Act 1933. The result is that any judgment from Norway will now be recognised and enforced in England and Wales if it meets the requirements stated in that Act, in particular that the judgment must be:

  1. final and conclusive;
  2. for a sum of money (but not a tax, a fine or other penalty); and
  3. from the Norwegian Supreme Court, Courts of Appeal, District Courts or Conciliation Boards.

However, even if the above criteria is satisfied, the Norwegian judgment will not be recognised and enforced if:

  1. the Norwegian court did not have jurisdiction to hear the claim;
  2. the dispute in question was the subject of a previous final and conclusive judgment by a court having jurisdiction;
  3. the Norwegian proceedings were brought contrary to a jurisdiction or arbitration agreement;
  4. the judgment debtor is entitled to and intends to bring an appeal against the Norwegian judgment;
  5. the judgment debtor did not receive notice of the Norwegian proceedings in sufficient time to defend them;
  6. it has been satisfied;
  7. it was obtained by fraud; or
  8. its contrary to public policy.

This means that those who might want to ultimately enforce a Norwegian judgment in the UK should be especially careful to avoid giving grounds to their counterparty to avoid enforcement on any of these bases.

It is worth keeping in mind that these issues are specific to court litigation. Brexit does not affect the recognition and enforcement of arbitral awards under the New York Convention and, therefore, should not impact on the enforcement of arbitral awards of UK or Norwegian seated tribunals in either country.

It is undeniable that the October 2020 agreement between the UK and Norway is a positive development, and the continued recognition of judgments between the 2 countries is welcomed. However, it is likely that disputes will arise as to which country's courts have jurisdiction, particularly where a party wishes to delay the resolution of a matter by engaging in jurisdictional arguments. As mentioned above, the UK has sought to become party to the Lugano Convention in its own right. It is hoped that will happen swiftly, but in the interim we are ready to assist clients navigate the current landscape.