UK businesses that trade internationally often face the challenge of recovering debts when customers based overseas fail to pay. While exporting provides opportunities for growth, it also raises a crucial legal question: what happens when a foreign debtor defaults on a payment, and the UK business wants to enforce a judgment obtained abroad?
The 2019 Hague Judgments Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters offers a potential mechanism for simplifying and streamlining this process. However, its application comes with significant limitations, particularly around insolvency proceedings—a crucial consideration for any solicitor advising on debt collection.
What is the 2019 Hague Judgments Convention?
The Hague Judgments Convention 2019 is an international treaty that aims to facilitate the mutual recognition and enforcement of judgments in civil and commercial matters across participating states. It was adopted by the Hague Conference on Private International Law (HCCH) on 2 July 2019.
The Convention provides a framework that allows a judgment obtained in one Contracting State to be recognised and enforced in another Contracting State without the need to re-litigate the underlying claim. For businesses involved in cross-border transactions, this offers potential savings in both time and costs.
For example, if a UK-based company obtains a money judgment in a country that is a party to the Convention, the company could seek to enforce that judgment in the debtor’s jurisdiction under the simplified process provided by the Convention—provided all other requirements are met.
The UK’s Current Position on the Convention
From 1 July 2025, courts in England and Wales will be required to recognise and enforce civil and commercial judgments within the scope of the Hague Judgment Convention. Foreign courts in jurisdictions that are also signatories to the Hague Judgment Convention must also recognise and enforce judgments stemming from courts in England and Wales.
What Types of Judgments Are Covered?
The Convention applies to civil or commercial judgments, including those that relate to contractual debts, money judgments, and commercial claims. It can cover both final judgments (e.g. where the claim has been determined on the merits) and some non-final judgments, provided they are enforceable in the state of origin.
Judgments relating to the payment of a specific sum of money—a common feature of debt collection—are explicitly covered. This means, for example, if a UK business sues an overseas supplier in a foreign court for breach of contract resulting in unpaid invoices and obtains a judgment, that judgment may be enforceable under the Convention in another Contracting State.
What are the Conditions for Enforcement?
To be enforceable under the Convention, a judgment must generally meet certain criteria. These include:
- Jurisdictional grounds: The court that gave the original judgment must have had jurisdiction in accordance with the Convention’s criteria. These include bases such as the defendant’s habitual residence in the state of origin, consent to jurisdiction, or a choice of court agreement.
- Finality and enforceability: The judgment must be final and conclusive in the state of origin and must be enforceable there.
- No grounds for refusal: The judgment must not fall under the Convention’s grounds for refusal of recognition, which include fundamental procedural unfairness, fraud, or public policy concerns.
These requirements help to prevent abusive litigation and protect the procedural rights of defendants.
Are Judgments Related to Insolvency Proceedings Covered?
Perhaps most significantly for debt recovery practitioners, the 2019 Convention does not apply to insolvency, bankruptcy, or restructuring proceedings. This means that if a judgment is part of a broader insolvency process—such as a distribution order from an insolvency administrator, or a debt admitted within bankruptcy proceedings—it falls outside the Convention’s scope.
This exclusion includes:
- Judgments handed down by insolvency courts
- Orders made in the context of collective proceedings
- Matters relating to the ranking or admission of creditors
This limitation reflects the complexity and jurisdiction-specific nature of insolvency law, which often includes public interest considerations and unique procedural frameworks.
Other exclusions relevant to commercial litigation include:
- Revenue, customs, and administrative matters
- Defamation
- Arbitration
- Anti-trust/competition law matters
- Family law and succession
As such, while the Convention holds considerable promise for ordinary commercial debt judgments, it cannot be used where the debtor has entered formal insolvency or restructuring proceedings.
What should insolvency solicitors be aware of concerning the 2019 Hague Judgments Convention?
Solicitors advising on cross-border contracts should carefully consider the jurisdiction clauses used. The Convention provides a smoother path to enforcement only if the originating court’s jurisdiction aligns with the Convention’s recognised grounds. This may influence drafting and litigation strategies.
For UK businesses dealing with overseas counterparties, the Convention—when in force—could offer a predictable and efficient mechanism to enforce debt-related judgments. However, until then, alternative mechanisms must be relied upon, such as:
- Bilateral treaties (where they exist)
- The common law enforcement procedure
- Local enforcement rules in the debtor’s country
Given the Convention’s exclusion of insolvency, solicitors must assess whether a debt claim could be affected by the debtor’s insolvency status. If so, enforcement may need to proceed through recognition of foreign insolvency proceedings, potentially under the UNCITRAL Model Law on Cross-Border Insolvency (which the UK has adopted), rather than the Hague Convention route.
Wrapping up
The 2019 Hague Judgments Convention presents a potentially transformative development in the enforcement of cross-border commercial judgments, including those relating to debt collection. For UK businesses operating internationally, the Convention will offer a streamlined, cost-effective route to enforcing foreign judgments. However, the Convention is not a panacea. Its scope is limited to certain civil and commercial matters, with notable exclusions, particularly around insolvency. This means that businesses and their solicitors must adopt a nuanced, strategic approach concerning foreign debt recovery.
