A UK request to remain part of a lucrative cross-border legal co-operation treaty faces a setback after Brussels told EU governments there were clear grounds to reject it.

Britain formally applied earlier this month to become an independent contracting party to the Lugano Convention, an accord that determines which countries’ courts have jurisdiction over cross-border civil and commercial disputes. The treaty, which has been signed by the EU and several other European countries, also ensures that the resulting judgments can be enforced abroad.

Despite formally exiting the EU on January 31, the UK is covered by the Lugano convention through its standstill transition agreement with Brussels.

But once the transition ends on December 31, lawyers warn English court judgments risk losing their force in EU jurisdictions, a situation that could leave the UK reliant on other, more fragmented, international arrangements.

Talks between the UK and EU on their post-Brexit future relationship have been disrupted by the coronavirus pandemic. Negotiations resumed last week but Michel Barnier, the EU’s chief negotiator, criticised the UK for failing to engage — a claim Britain strongly rejected.

Although UK officials say Britain wants to keep its request to be part of the Lugano convention separate to the future-relationship talks to avoid “horse-trading”, becoming a signatory has long been a post-Brexit target.

The UK government published a statement in January welcoming support from Switzerland, Iceland and Norway for its intention to join.

Britain hopes to be accepted in time for when the post-Brexit

transition period expires at the end of this year, but it cannot join without the approval of the Council of the European Union — the EU institution that brings together national governments.

Following the formal request to join, EU diplomats said the European Commission had advised the bloc’s member states earlier this month that a quick decision was “not in the EU’s interest”.

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The diplomats said the commission raised the issue during a meeting with EU member-state officials on April 17, saying that granting the request would be a boon for Britain's legal sector.

A commission official told the meeting there were other international rules that Britain could use as a fallback, and that current signatory countries were all part of the EU’s single market, the diplomats said.

With the UK determined to leave the single market after the transition expires, the commission “will surely not make a positive recommendation,” said one national official who took part in the meeting.

The Lugano agreement “is an existing multilateral convention explicitly open to all countries around the world,” the UK government said. “We have co-operated with the countries who are signed up to the convention on matters of private international law for decades prior to the inception of the single market and the EU.”

London’s courts are viewed as a favoured global centre for commercial disputes. Lawyers say the city’s standing could be affected if the UK were unable to accede to Lugano and companies chose to litigate elsewhere, or were able to flout its rulings overseas.

Ben Rayment, a barrister at Monckton Chambers, said: “There’s no doubt that [not joining Lugano] creates the potential for greater expense and difficulty in obtaining recognition and enforcement of the judgments of the English courts in the EU27.”

Robert Buckland, the UK’s justice secretary, had “constructive talks” on the Lugano convention with Didier Reynders, the EU’s justice commissioner, at a meeting in Zagreb in January, a UK official said.

The convention says that application requests should normally be dealt with within a year. Britain formally applied on April 8.

“We've still got some time to examine the request,” said one EU diplomat, adding that governments were awaiting a “detailed analysis from the commission”.

Another diplomat said it would be “quite logical to extend Lugano” because it would avoid disruption for business.

Brussels “is conducting a thorough assessment of the request and will discuss it with member states,” an EU commission official said.





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