Jurisdiction – Belgian Supreme Court rules on “transition period gap”

The Belgian Supreme Court has held that the Hague Convention on Choice of Court Agreements 2005 continued to apply to the UK during the Brexit transition period from 01 February 2020 to 31 December 2020.

The issue

With the UK’s departure from the EU came the loss of the Recast Brussels Regulation regime for deciding which courts had jurisdiction over cross-border disputes in Europe where a UK party was involved. Where parties had contractually specified an exclusive choice of court, the Hague Convention on Choice of Court Agreements 2005 (Hague 2005) still provided a framework. The UK had been a member of Hague 2005 by virtue of the EU accession to it in 2015 and it applied to accede again in its own right in 2020.

However, the UK’s independent accession to Hague 2005 only took effect on 01 January 2021, 11 months after it formally exited the EU. This mattered, because under Article 16.1, Hague 2005 only applies to agreements concluded “after its entry into force for the State of the chosen court”. The UK made clear in its instrument of accession that it believed there was continuity of membership, because the period from 01 February 2020 to 31 December 2021 was the “transition period” during which, despite the UK’s formal departure, the UK continued to be treated as a member of the EU.

Despite the UK’s position that Hague 2005 continued in effect throughout this period, others including the European Commission appeared to take a different view. For the first time, to our knowledge, a court in an EU Member State has now ruled upon this issue.

Gap analysis

In Culturel-Ludique-Divertissement Distribution v Hori Ltd (C.24.0012.F/1), The Belgian Supreme Court was faced with a dispute between a Belgian party and an English party, whose contract was concluded during the Brexit transition period and specified that the English courts would have exclusive jurisdiction. The Belgian party brought proceedings in Belgian, arguing that they had jurisdiction and that Hague 2005 could not override this because of the gap in the UK’s membership: the choice of court clause pre-existed the UK’s accession in its own right.

The Supreme Court held that the UK’s status under the transition period agreement meant that Hague 2005 continued to apply and that the English courts had exclusive jurisdiction to hear the dispute. In the Court’s view, there was no gap in the UK’s membership of Hague 2005.

What this means for you

This situation will only arise in disputes arising from contracts entered into between 01 February 2020 and 31 December 2021, with an exclusive jurisdiction clause in favour of courts in the UK. It is important to note that the Belgian court’s decision does not bind other EU Member State courts and a different conclusion may be reached in other proceedings yet to come. Nonetheless, it is an encouraging result for those who continued to choose the English courts throughout this period and narrows an area of uncertainty left by the upheaval in cross-border legal relations.