EU and EFTA resident claimants and counterclaimants are currently a protected species in English litigation: an order for security for costs, based on the fact they are resident out of the jurisdiction, is unavailable against them. This is as long as they are resident:
“… in a Brussels Contracting State, a State Bound by the Lugano Convention, a State bound by the 2005 Hague Convention or a Regulation State, as defined in section 1(3) of the Civil Jurisdiction and Judgments Act 1982” (see CPR 25.13(2)(a)).
Post- Brexit, with the UK withdrawing from the European private international rules on jurisdiction and recognition and enforcement of judgments, regulation 8 of the Civil Procedure Rules 1998 (Amendment) (EU Exit) Regulations (2019/521) (see here) will amend CPR 25.13(2)(a) to omit the protections conferred on claimants by reason of their being resident in “a Brussels Contracting State, a State Bound by the Lugano Convention” and “or a Regulation State”.
This continuing protections in CPR 25.13(2)(a) will soon only be available to those who are resident in a “State bound by the 2005 Hague Convention”.
The apparent justification for this is that the Hague Convention on Choice of Court Agreements of 30 June 2005 (see here), provides for the recognition and enforcement of judgments of a Contracting State which was “designated in an exclusive choice of court agreement”. The grounds for refusal are limited. All EU-27 Member States are bound by the 2005 Hague Convention.
As a result, even post-Brexit, a costs order made in an action brought by a French claimant in England pursuant to an English jurisdiction clause stands a good prospect of being recognised and enforced in the courts of another EU-27 Hague Contracting State.
But the mere fact an EU claimant is resident in a Hague Contracting State provides absolutely no costs protection for defendants when that claimant’s action is based on a jurisdictional basis other than an exclusive English jurisdiction clause and therefore fall outside the material scope of the Hague Convention.
The amendments to CPR 25.13(2)(a) that have now been approved by Parliament, make no provision for this. Instead, they provide something of a “free pass” to EU-27 claimants.
For under the amended CPR 25.13(2)(a), a French claimant who sues an American defendant in England (based on the law of the contract being English law) will still not be liable to provide security for costs under CPR 25.13(2)(a) even though any English costs judgment in favour of the American defendant would not be recognised and enforced in EU-27 states under the Hague Convention.
In such circumstances, why should an EU-27 claimant be entitled to avoid providing security for costs just because they are resident in a Contracting State to what is a wholly inapplicable Convention?
The failure to recognise this is a regrettable oversight. A sensible revision would have been to amend CPR 25.12 (2)(a) to provide something along the following lines:
“… a State bound by the 2005 Hague Convention (when the court’s jurisdiction in the action is founded on an exclusive choice of court agreement designating the courts of England & Wales)”.
Let’s hope the Rules Committee correct this when the dust finally settles.