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After Britain officially broke away from the EU in January, Prime Minister Boris Johnson has had to ask Brussels for permission to rejoin an international treaty, or risk devastating a multi-billion-pound legal services industry. The agreement is called the Lugano Convention and its effects are materially the same as the 2001 Brussels Regulation. It governs issues of jurisdiction and enforcement of judgments between the EU member states and the European Free Trade Association (EFTA) countries other than Liechtenstein (namely Iceland, Switzerland and Norway).
London is regarded as the global capital for international dispute resolution, due to England’s world-class legal system and courts.
It is a broad and highly lucrative industry, dealing with everything from family disputes to international business operations.
A long-term failure to rejoin the Lugano Convention could do real damage to the UK’s world-beating legal services sector, as well as creating difficulties for large companies.
The UK dropped out of the treaty as a consequence of Brexit, and applied to rejoin in April 2020.
Such accession requires the unanimous agreement of all the other contracting parties to the Convention and the European Commission has now recommended that the EU deny this request.
It said that the European bloc was “not in a position” to give its consent to UK accession.
According to the Law Society, legal services added nearly £60billion to the UK economy in 2018, while in 2017 exports of legal services hit £5billion.
The EU’s position is not shared by EFTA countries, though, who have proven to be much more welcoming.
In March 2021, the Swiss Federal Department of Foreign Affairs published a letter confirming that Switzerland had consented to the UK being invited to deposit its instrument of accession to the Lugano Convention.
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The letter reads: “Switzerland welcomes the intent of the United Kingdom (UK) to accede to the Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (the ‘Lugano Convention 2007’) and will support a request for accession from the UK.”
Iceland and Norway have also signalled support for Brexit Britain to rejoin the Convention.
While keeping the UK out will be costly for London, Brussels’ move could have some broader implications for the European bloc.
The former President of the EFTA court, Swiss jurist Carl Baudenbacher, claimed the EU’s refusal to let the UK back in was “an unfriendly act towards the EFTA States” and might have been one of the reasons behind Switzerland’s decision to scrap efforts aimed at agreeing an overarching treaty with Brussels.
Switzerland is not in the bloc but has signed up to many of its policies, such as freedom of movement.
The relationship is currently governed by more than 120 bilateral deals, and a failure to replace them with one framework deal could harm ties.
The European Commission said in May: “We regret this decision, given the progress that has been made over the last years.”
The EU-Switzerland free trade agreement dates back to 1972.
The European Commission said that without an EU-Swiss framework agreement, modernising that relationship would not be possible.
Existing deals were “not up to speed” and the impact of Switzerland’s decision would have to be analysed, it warned.
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The right-wing Swiss People’s Party (SVP) welcomed the breakdown of talks as “a victory for Swiss self-determination”, while trade unions were also pleased as they had been concerned about the impact on wage protection and public services.
In a recent report, Wolfgang Streek, emeritus director of the Max Planck Institute for the Study of Society, warned European Commission President Ursula von der Leyen that as a result of Switzerland’s decision, she could get in trouble.
He wrote: “In Brussels, the Swiss dossier resides in the portfolio of Ursula von der Leyen, President of the Commission, who has inherited it from her predecessor, the now forgotten Jean-Claude Juncker.
“Her failure to make Switzerland capitulate weakens her position further, by once more laying bare the fault lines of the one-size-fits-all ‘ever closer union’.
“Pressured by imperial-centralist hardliners in the EU Parliament – and, one should assume, by the German and French national governments – the Commission is now threatening Switzerland with retaliation.”
The Swiss are told by the European bureaucracy that without the Framework Agreement this will be difficult and sometimes impossible, which would cost them dear, Mr Street continued in his report for Briefings for Britain.
In an exclusive interview with Express.co.uk, Prime Minister Boris Johnson’s trade adviser Shanker Singham claimed Switzerland would be better off with a deal similar to the one Britain struck with the EU.
Mr Singham, the CEO of economic consultancy Competere, said: “There is no one in the world that has a full zero-quota, zero-tariff deal with the EU.
“We are the only country that has that.
“To get a zero-quota, zero-tariff deal with the EU is very very unusual.”
He added: “Frankly, this is a better deal than what the Swiss have with the EU.
“If I was Switzerland, I would want a similar deal.
“And in fact, if I was Switzerland, Turkey or even one of the Mediterranean countries like Morocco, I would be going for this exact kind of deal.”
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