COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT REPORT Accompanying the document Proposal for a Council Decision on the accession by the European Union to the Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters
Date: 2021-07-16
Institutions: Directorate-General for Justice and Consumers, European Commission
Subjects: accession to an agreement, civil law, civil procedure, commercial law, enforcement of ruling, international convention, judicial cooperation, judicial cooperation in civil matters in the EU, private international law, real property

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   EUROPEAN COMMISSION  Brussels, 16.7.2021  SWD(2021) 193 final  COMMISSION STAFF WORKING DOCUMENT  EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT REPORT  Accompanying the document Proposal for a Council Decision on the accession by the European Union to the Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters    {COM(2021) 388 final} - {SEC(2021) 279 final} - {SWD(2021) 192 final}  
 
 
Executive Summary Sheet 

Impact  assessment  on  the  accession  by  the  European  Union  to  the  Convention  on  the  Recognition 
and  Enforcement  of  Foreign  Judgments  in  Civil  or  Commercial  Matters  (the  “Judgments 
Convention”) 

Why? What is the problem being addressed?  

A. Need for action 

Currently, EU citizens and businesses seeking to have a judgment given in the EU recognised and enforced in a 
third country face a scattered legal landscape due to the absence of a comprehensive international framework 
for the recognition and enforcement of foreign judgments in civil and commercial matters.  This means that the 
judgment creditors have to navigate through a patchwork of national laws of third countries on the acceptance of 
foreign judgments, as well as bilateral, regional and multilateral treaties in place. Therefore, to stand a chance 
that their judgment will be enforced, those engaging in international litigation have to invest resources, time and 
often external expertise to prepare a robust litigation strategy. This complexity, as well as the associated costs 
and  legal  uncertainty,  are  deterring  factors  which  may  cause  businesses  and  citizens  either  to  avoid  court 
litigation and seek other forms of dispute resolution, give up on pursuing their claims, or decide not to engage in 
international dealings altogether. This, in turn, can have a negative impact on the willingness of EU businesses 
and citizens to engage in international trade and investment activities. In addition, because the enforcement 
of EU judgments in third-countries is uncertain, the right of access to justice of EU businesses and citizens is 
hampered. 

What is this initiative expected to achieve?  

The general objectives are to enhance access to justice for EU businesses and citizens through a system that 
facilitates  the  recognition  and  enforcement  of  foreign  judgments  everywhere  in  the  world  where  the  judgment 
debtor happens to have assets, thereby promoting international trade and investment. More specifically, the 
initiative  aims  at  increasing  legal  certainty  and  predictability  of  international  litigation,  reducing  costs  and 
length of proceedings and allowing the recognition and enforcement of third-country judgments in the EU only 
where fundamental principles of EU law are respected and EU internal acquis on the same subject matter 
is not affected. 

What is the value added of action at the EU level?  

The  initiative  falls  under  EU’s  exclusive  competence.  This  means  that  the  accession  to  this  Convention  by 
individual Member States is not possible and the sought objectives can only be achieved by action taken at the 
EU level. 

B. Solutions 

What  legislative  and  non-legislative  policy  options  have  been  considered?  Is  there  a  preferred 
choice or not? Why?  

Due to EU’s constant support and involvement in the negotiations that led up to the adoption of the Convention 
in  2019,  as  well  as  the  preservation  of  EU’s  main  interests  in  the  process,  the  option  of  not  acceding  to  the 
Convention  was  mainly  taken  into  account  as  a  benchmark  in  order  to  assess  the  several  policy  options 
considering accession.    

These  options  looked  at  EU’s  accession  to  the  Judgments  Convention  either  without  any  declaration,  or  while 
entering a declaration under Article 18 of the Convention excluding its application to certain matters (consumer, 
employment or insurance matters, as well as commercial leases of immovable property), or judgments in civil or 
commercial matters involving States or State entities, under Article 19 of the Convention. Yet another option was 
considered in the form of accession making both declarations under Articles 18 and 19.  

The preferred option is to accede to the Convention with a limited, targeted declaration excluding the recognition 

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and enforcement by courts in the EU of third-country judgments which ruled on commercial leases (tenancies) of 
immovable property situated in the EU. A declaration that would exclude the other considered matters is deemed 
to  be  unnecessary  because  the  Convention  does  provide  adequate  protection  for  weaker  parties,  albeit  in  a 
different fashion than in the EU acquis, and, unlike the preferred option, broader declarations could impede the 
full achievement of the objectives of this initiative. While the preferred option enhances access to justice and 
is  set  to  promote  international  trade  and  investment,  it  will  equally  increase  legal  certainty  and 
predictability in international court litigation, reduce costs and length of proceedings and is fully in line 
with  the  EU  acquis  on  this  matter,  namely  the  Brussels  Ia  Regulation  (Regulation  (EU)  No  1215/2012). 
Pursuant to this Regulation, courts in the EU have exclusive jurisdiction to rule on disputes related to commercial 
tenancies of immovable property situated in the EU.   

Who supports which option?  

Accession to the Judgments Convention was supported by Member States and by the overwhelming majority of 
stakeholders (legal professionals, businesses, professional organisations of lawyers and of bailiffs, academics, 
etc.). On the possibility to make declarations, Member States opposed a declaration based on Article 19 of the 
Convention  and  did  not  express  clear  views  on  Article  18  declarations.  Only  a  small  number  of  stakeholders 
favoured  accession  with  a  declaration  under  Article  19  while  for  Article  18  declarations  there  was  no  clear 
tendency detected. 

C. Impacts of the preferred option 

What are the benefits of the preferred option (if any, otherwise main ones)?  
The direct benefits for EU citizens and businesses when attempting to have an EU judgment recognised and 
enforced in the key trading partners analysed (Argentina, Australia, Brazil, Canada, China, South Korea, Japan, 
United States)  are estimated to be between EUR 1.1 and 2.6 Million during the reference period (2022-2026). 
This has to do with a projected decrease of 10%-20% of costs related to the recognition and enforcement of 
EU judgments in third countries. In addition, the average  length of proceeedings is expected to decrease by 
between three to six months on average.  

This  option  will  have  a  positive  impact  on  most  national  legal  systems  of  the  Member  States,  standing  to 
improve  the  current  level  of  acceptance  of  third-country  judgments  in  22  Member  States.  For  the 
remaining four Member States the situation after accession will not be worse off than today, but there would be 
little  or  no  improvement  compared  to  the  current  situation.  In  addition,  this  option  is  fully  in  line  with  the  EU 
acquis (Brussels Ia Regulation) and, as a result, has the highest level of coherence at this level.    

What are the costs of the preferred option (if any, otherwise main ones)?  
The  public  authorities  of  the  Member  States  are  expected  to  have  some  one-off  costs  related  to  the 
implementation  of  the  Convention  but  such  costs  are  expected  to  be  negligible.  The  judiciary  would  probably 
experience a slight increase in the number of cases in the reference period, but this increase will be offset by 
the  expected  decrease  in  the  length  of  proceedings.  There  are  no  costs  foreseen  for  businesses  or 
citizens.   

How will businesses, SMEs and micro-enterprises be affected?  
EU businesses will benefit from the increase in legal certainty and predictability in international dealings. These 
benefits  are  expected  to  be  more  prominent  for  SMEs  than  for  large  businesses  because  the  latter  tend  to 
prefer arbitration rather than court  litigation  when trying to resolve  an  international  legal  dispute. To the  extent 
that EU businesses are engaging in court litigation, they will benefit from improved access to justice because 
of the higher likelihood of recognition and enforcement of European judgments in third countries, but also from 
lower costs (between 10% and 20%) and shorter length of proceedings (between 3 to 6 months). Because 
of the reciprocal effect of the proposed declaration to be made by the EU, these benefits will not extend to EU 
businesses seeking recognition and enforcement of an European judgment that ruled on a commercial lease of 
an  immovable  property  situated  in  the  State  where  such  enforcement  is  sought.  However,  the  estimated  low 
number of such judgments means that these situations will not affect the overall positive impacts on businesses.    

Will there be significant impacts on national budgets and administrations?  
The initiative is not expected to have significant impacts on national budgets and administrations. It is expected 
that the current resources will be sufficient to deal with the implementation of the Convention.  

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Will there be other significant impacts?  

By  2026  trade  in  goods  and  services  as  well  as  foreign  direct  investment  with  the  selected  third  countries  is 
expected  to  increase  with  figures  of  between  0.3%  and  1.6%.  In  addition,  the  Convention  may  facilitate  the 
recognition  and  enforcement  of  judgments  where  it  is  currently  exceedingly  difficult  to  have  EU  judgments 
enforced for the benefit of EU creditors, with the indirect effect of further promoting trade with such countries. 

These indirect impacts could ultimately translate into improved economic growth and job creation. 

When will the policy be reviewed?  
Three to five years after the EU’s accession. 

D. Follow up 

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