In an unexpected development, the European Commission has reportedly opposed the UK’s accession to the Lugano Convention on the grounds that the UK is not a member of the European Economic Area nor the European Free Trade Association, and that allowing its accession would set a precedent for other countries who are not part of the European Union or European Free Trade Association to demand membership.
The Lugano Convention determines which countries' courts have jurisdiction over cross-border disputes and allows legal judgments to be enforced across borders, with all EU countries plus Norway, Switzerland and Iceland members of the pact.
The benefits of accession to the Lugano Convention may include additional certainty and reduced costs when it comes to jurisdictional issues and cross-border enforcement of judgments. If accession is not permitted, resolving disputes through arbitration, which falls outside the ambit of the Lugano Convention, may become a more attractive option.
The final decision will be taken collectively by EU nations in the coming weeks, with all contracting states needing to unanimously approve an application.