Will They or Won't They? Lugano Pact on a Lame de Couteau

Posted on Apr 14, 2021. by NTI

Lugano is a picturesque lakeside city in Switzerland. It is pretty, laid-back and home to a Film Festival, so it is also cool and chic, with an edge. Nestled between the 15th Century San Lorenzo museum and Alprose Chocolate Museum is the 63,000 square feet convention centre, which was home to the 'Lugano Convention', which provides for the recognition and enforcement of a wide range of civil and commercial judgments between the EU and EFTA states. Which brings us neatly to 'the EFTA states'.

There are four of them; Iceland, Liechtenstein, Norway and Switzerland and what they have in common is that, maybe surprisingly, they score among the highest in the world for competitiveness, wealth creation per inhabitant, life expectancy and quality of life. But that is not the reason the UK want to join them (well, it is part of the reason, but not the most important one). Having left the European Union on 31 January 2020 we also left behind the EU Insolvency Regulations 2015 which, amongst other things, introduced a mechanism for co-ordinating insolvencies within cross-border corporate groups. Having raised our drawbridge to Brussels, it left British Insolvency Practitioners exposed to local laws per member state, without automatic access for our law in their countries. When in Belgium we had to do as the Belgians did, likewise in Malta, and so on.

One way back in was for the UK to join the Lugano Convention, therefore setting up seamless links, including borderless access to assets held in member countries. Being accepted into the Lugano Club gave us a side door entrance to EU jurisdictions. This brings us to today (Wednesday 14 April).  The Financial Times reported on Monday that ..."Britain is poised to win Brussels’ backing to join a key European legal co-operation pact, in a positive sign of EU-UK collaboration after Brexit."


City AM report today that, ..."The EU is reportedly against allowing the UK to join the convention on the grounds that it is not a member of the European Economic Area or the European Free Trade Association."

Bloody French.

So, which is it? Without accession to the Convention, English court judgments about cross-border disputes risk losing their force within the countries covered by the co-operation pact, leaving you lot reliant upon fragmented international agreements and finger-in-the-air local laws, with all the expense and translation issues accompanying that.

The final decision on UK membership of the Convention lies with the European Council, which represents the bloc’s national governments. And they will have memories of Nigel Farage and Ann Widdecombe waving both Union flags and bye-bye to their European counterparts at the end of January 2020. The fact is that 'Brussels' doesn't want us in, but this is at odds with other member states. The Dutch and the Baltics want us, but the French do not. Quelle surprise.

We should know this week, but it is on a 'lame de couteau', or a 'mes rand'. This week should bring more news and when it does, you will have it from the NTI newsroom.

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