Following Brexit, London arbitration awards remain subject to recognition and enforcement under the New York Convention abroad, but English court judgments are less straightforward to deal with.
While enforcement remains possible under the 2005 Hague Convention, this does not apply to asymmetric jurisdiction agreements, as commonly used by banks and other finance providers.
Even if the Hague Convention applies, where an exclusive English court jurisdiction was or is agreed, this is now more complicated, time-consuming and expensive when enforcing against an EU party.
The three non-EU parties to the 2007 Lugano Convention, Iceland, Norway and Switzerland, have consented to the UK acceding, with only EU consent needed for the UK to reacquire its former rights.
While it seems many Lugano Convention states see the mutual advantage in having the UK accede to the Lugano Convention, the EU Commission takes the position that the EU should not consent.
The European Parliament and the Council now have an opportunity to express their views before the EU Commission informs the Lugano Depositary, and only unanimity will see the UK’s accession.
This is a two-way street, so Lugano Convention parties who do business with UK parties with EU jurisdiction applying would also be disadvantaged – but politics, not logic, may dictate the result.
Increased complexity, time and expense to enforce judgments
A case in point is Piraeus Financial Holdings v Grand Anemi, where a Greek bank obtained a London High Court judgment against Greek interests, which in due course they may see the need to enforce in Greece.
The added complication is the debtors’ principal, Michail Zolotas, is understood to have financial difficulties, suggesting the bank may have to sell its US$96,272,124 judgment at a steep discount.
Where a counterparty is in financial distress, time is of the essence in seeking to secure the best and most viable recovery, so a judgment that is harder and slower to enforce is not going to be helpful.
The bank was wise enough to commence proceedings in 2019, prior to the loss of enforcement rights under the Lugano Convention, but the position for 2021 commenced cases is different.
Even so, it took until February 2021 to get judgment, which is a not insubstantial delay and getting that judgment is only half of the battle; it is all for naught without a successful enforcement.
How could mediation help?
While a mediator sometimes does not become involved until litigation is well underway, that usually does not have to be the case, and early intervention is more desirable if enforcement is difficult.
At that point, often when substantial costs have already been incurred, achieving a satisfactory settlement can become difficult and the extra costs involved can become an obstacle to resolution.
As some contractual disputes are very expensive and time consuming to resolve in court and invite unwanted publicity, mediation could facilitate a faster, commercial and discreet resolution.
A number of commercial solutions, aside from a judgment, could have been contemplated in Grand Anemi – a heavily discount recovery, in view of enforcement issues, is but one possible example.
A specialist commercial mediator is not only an expert at helping parties reach a mutually acceptable agreement but will understand the commercial situation of both sides and the limitations they face.
The mediator will use this in-depth understanding of the way business is done to help the parties to come up with innovative solutions that might not otherwise have been in contemplation.
The benefit of seeking an earlier resolution to the dispute
Time is often a big factor in resolving a dispute – in Grand Anemi, the delay in obtaining judgment may be prejudicial to any recovery, whereas an earlier resolution may have salvaged something.
Addressing the problem as soon as it was apparent and having an early session with a mediator may have resolved the issues quickly to put the parties back on track and preserved the relationship.
Where difficulties are allowed to fester and communication is sporadic and reluctant, it is possible to waste time achieving little except a worsening of relations, so it is important to seize the day.
It would have been important to approach the problem with an open mind and some flexibility as resolving a dispute of this type at an early stage would have involved willingness to compromise.
In helping the parties to see the pros and cons of fighting the dispute out, a mediator could have helped the parties to appreciate the risks and to see the benefit of improving the situation.
Contact us
At Lux Mediation, we offer a range of different Dispute Resolution Services, designed to deal with all types and stages of disputes. We are experienced in and understand the subtleties of online mediation. Our mediators have extensive credentials and experience in areas including maritime,
international, EU and general commercial and civil law.
We can step in early to advise you in respect of seeking to resolve a dispute. We work internationally and have an in-depth understanding of cultural differences, often of great importance in a successful mediation.
Our mediators are experts in both mediation and commercial enterprise and we have an excellent track record of success in helping businesses put difficulties behind them so that they can focus on their goals.
If you would like to explore further whether we can help you to resolve a dispute or you have any questions about the process, please call Lux-Mediation on +44 (0)7876 232305 or email
mediation@lux-mediation.com.
With many years international and domestic experience in mediation, arbitration and litigation Lux Mediation can give guidance on any dispute with a view to a swift and effective resolution.