The EU formally acceded to the convention of 2 July 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters in August 2022 (the “Convention”).
The Convention will enter into force on 1 September 2023.
To date, the Convention has been signed by Uruguay, Ukraine, Israel, Costa Rica, Russia, and the United States; only the Ukraine and EU (except for Denmark) have ratified the Convention.
Recognition and enforcement of foreign judgement in civil or commercial matters
The main objective of this Convention is to facilitate and secure cross-border relations by harmonizing the circulation of judgments on a global scale.
Although the Convention shall apply to the recognition and enforcement of judgments in civil or commercial matters, a certain number of exceptions have been set under the Convention, for example, family law, insolvency, freight and passenger transport, slander, arbitration, restriction of competition matters. These exclusions render the Convention of a more restricted application than Regulation EU n°1215/2012 of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters within the EU (“Brussels I Recast”).
Under the Convention a judgment refers to any type of judicial decision rendered on the merits of a case regardless of it being referred to as a judgement.
We note that, under article 4 of the Convention, a foreign judgment shall only be recognized or otherwise receive “full faith and credit” if two conditions are met:
- The decision produces an effect in the State of origin; and
- The decision is recognizable and executable in the State of its origin and provided that the conditions set forth under articles 5 and 6 of the Convention are complied with.
It should be noted that a judgement is eligible for enforcement under articles 5 and 6 provided one of 13 grounds is complied with.
It should be further noted that decisions regarding real estate rights will only be recognized and executed if that decision has been rendered by the jurisdiction where the real estate is situated.
Refusal to recognize and execute a decision
Under articles 7, 8 and 10 of the Convention, the requested State has a right to refuse the recognition and the execution of a judicial decision for the reasons listed exhaustively by the Convention (for example, fraud, incompatibility with public order, the documents introducing the procedure have not been properly served and conflict with another decision). In our view, some elements in the said articles could render the execution of a decision complex given that it may require the judge of the requested State to analyze the decision taken by a foreign judge under a foreign law. In effect, from a Luxembourg perspective, those provisions could further complicate our current full faith and credit proceedings (a.k.a “Exequatur”).
While providing mutual recognition of judgments, the Convention maintains each contracting State’s internal procedures for recognition, which in Luxembourg is the so-called Exequatur procedure.
We note that, the Convention permits the possibility for the contracting States to derogate from one or several provisions of the Convention.
(Articles 14, 17 to 19, 25 and 30)
In our view, although the Convention is well intended it remains of limited benefit.
As mentioned, a contracting State’s right to derogate from certain provisions, the pre-existing conditions for enforcement, and the matters which are expressly excluded detract significantly from its attractiveness.
Furthermore, the procedure of recognition and execution remain those applicable in each State, and therefore any local complexities, as the case may be, remain in place. In this respect, in Luxembourg, the procedure of Exequatur will apply to all States other than those being party to the Brussels I Recast and the Lugano Convention.
We note that, an Exequatur procedure entails substantial costs, is lengthy as well being subject to the right of appeal.
Therefore, in our view, enforcement, and recognition of decisions within the EU under the Brussels I Recast and the Lugano Convention will remain far easier, quicker, and ultimately, cheaper.
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