Implications of Hague 2019 for sureties

On 27 June 2024, the UK Government ratified the 2019 Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (Hague 2019) which will come into force on 1 July 2025.

This article considers the implications of Hague 2019 for sureties and what benefits it provides to sureties in respect of proceedings issued on or after 1 July 2025.

Enforcement regime post Brexit

Following Brexit, the UK ceased to be a party to the EU’s Recast Brussels Regulation. Among other things, the Recast Brussels Regulation provided for expedited, mutual recognition of each EU member state’s court judgments.

Post Brexit businesses therefore had to look at other (potentially more involved) avenues when looking to enforce UK judgments in the EU or EU judgments in the UK.

To address this, at least in part, the UK proceeded to ratify the 2005 Hague Convention on the Choice of Court Agreements 2005 (Hague 2005).

However, Hague 2005 does not provide a full alignment with the position under the Recast Brussels Regulation.

Most pertinently from a surety perspective, Hague 2005 does not apply to contracts containing non-exclusive jurisdiction or asymmetric jurisdiction clauses. This means that a deed of indemnity which contains an asymmetric jurisdiction clause would not enable that surety to benefit from the expedited enforcement of a UK judgment in an EU member state (or any other Hague 2005 signatory state).

For this reason, symmetric exclusive jurisdiction clauses have commonly been adopted in English law governed Deeds of Indemnity. These clauses have the advantage of being Hague 2005 compliant, but the trade-off is that they do not allow the surety to pursue a non-UK indemnitor directly in its home courts, eg to obtain a freezing order against that indemnitor’s assets.

Enforcement regime Post Hague 2019

Unlike Hague 2005, Hague 2019 does not require parties to have agreed a symmetric exclusive jurisdiction clause in their agreement in order to take advantage of the streamlined enforcement process. This means that sureties will once again be able to include non-exclusive, asymmetric or unilateral dispute resolution clauses in their Deeds of Indemnity and still take advantage of the streamlined enforcement process under Hague 2019.

What should a surety be doing now? Should a surety move away from a symmetric exclusive jurisdiction clause?

Given that Hague 2019 will apply to proceedings issued on or after 1 July 2025, sureties should consider whether they wish to update their Deeds of Indemnity to take advantage of the position under Hague 2019. 

Read more on this topic in our Hague Convention 2019 article.

If you wish to discuss further, please contact any of our Mills & Reeve surety team contacts.

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