EU punishing UK for ‘sake of it’ after preventing British accession to key treaty

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After Britain officially left the transition period in January, Prime Minister Boris Johnson has had to ask the EU for permission to rejoin an international treaty, or risk devastating a multi-billion-pound legal services industry. The agreement is called the Lugano Convention and its effects are materially the same as the 2001 Brussels Regulation. It governs issues of jurisdiction and enforcement of judgments between the EU member states and the European Free Trade Association (EFTA) countries other than Liechtenstein (namely Iceland, Switzerland and Norway).

London is regarded as the global capital for international dispute resolution, due to England’s world-class legal system and courts.

A long-term failure to rejoin the Lugano Convention could do real damage to the UK’s world-beating legal services sector, as well as creating difficulties for large companies.

The UK dropped out of the treaty as a consequence of Brexit, and applied to rejoin in April 2020.

Such accession requires the unanimous agreement of all the other contracting parties to the Convention and the European Commission has now recommended that the EU deny this request.

It said that the European bloc was “not in a position” to give its consent to UK accession.

The EU’s position is not shared by EFTA countries, though, who have proven to be much more welcoming.

In March 2021, the Swiss Federal Department of Foreign Affairs published a letter confirming that Switzerland had consented to the UK being invited to deposit its instrument of accession to the Lugano Convention.

The letter reads: “Switzerland welcomes the intent of the United Kingdom (UK) to accede to the Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (the ‘Lugano Convention 2007’) and will support a request for accession from the UK.”

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In an exclusive interview with Express.co.uk, a UK Government trade adviser, who wishes to remain anonymous, has claimed the EU needs to be very careful, as Switzerland might “react” if the bloc continues to throw off Britain just for the sake of it.

He said: “I think the EU has to be careful, particularly with the EFTA countries and Switzerland, as they could push them away with their actions.

“Mainly Switzerland because what Switzerland does is different.

“It voluntarily aligns to EU regulation, which is obviously quite controversial and it is becoming more and more controversial.

“For example, the Swiss had their own data protection act, lower penalties for GDPR and the EU said because it was different, that they were going to punish them on financial services even if the outcome was the same.”

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He added: “If you add this to that, then I think you are going to get into a situation very quickly where the Swiss are going to react.

“The EU has to be careful about this

“What is the benefit of the European Community and what is the benefit for European companies to have the UK in the Lugano convention?

“I wouldn’t throw the UK off things for the sake of throwing the UK off things when I could be hurting my own economic interests.”

The sentiment was echoed by several lawyers, who believe the Commission’s decision will now bring painful and costly legal uncertainty to family break-ups.

Rachael Kelsey, president of the European chapter of the International Academy of Family Lawyers, urged the EU to reconsider its position for the sake of millions of EU and UK citizens with family relationships that straddle the English Channel.

She told the Financial Times: “A year ago, we could say with total confidence and clarity ‘this court has jurisdiction, this is how long a case will take, and this is the cost ballpark’ — but now that is no longer the case.

“We need to put politics aside and recognise that there are millions of EU and UK citizens who are going to be prejudiced if we don’t end up with a better set of harmonised rules.”

Moreover, Josep Gálvez, a former Spanish judge and commercial arbitration expert now at London-based Del Canto Chambers, told the publication the Commission’s advice to block UK membership appeared to be designed to weaken the attraction of the British capital as a centre for dispute resolution.

He said: “It is a way to punish the UK for leaving the EU, but also a very good opportunity for some EU jurisdictions to attract international litigation to their courts.”

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