Since 1 July 2025 the Hague Judgments Convention 2019 applies to the UK and the EU. Any consequences for insolvency proceedings and preventive restructuring plans?
The Hague Judgments Convention 2019 facilitates the recognition and enforcement of civil and commercial judgments, including consumer and individual employment contracts. Officially titled as The Hague Convention on the Recognition and Enforcement of Foreign Judgements in Civil and Commercial Matters, it establishes conditions for recognition and enforcement of judgments, and possible grounds for their refusal. The convention aims to provide certainty and predictability for those operating in transnational civil or commercial situations.
The goals of the convention are of enormous importance in the world of trade and investment. A clear and predictable system for recognition and enforcement of judgments is an inherent part of it, ensuring a successful party will have a meaningful judgment to enhance their access to justice by reducing timeframes, costs, and risks. During negotiations, parties are able to make an informed decision as to where – if this is unexpectedly necessary – to initiate proceedings, taking into account where a judgment will be recognised and enforced. The convention was developed by the Hague Conference on Private International Law (HCCH), which currently has 92 member states.
The convention establishes a common framework under which judgments from one contracting party (a national state that has signed the convention) will be recognised or enforced in the jurisdiction of another contracting party if they are eligible for circulation and the grounds for refusal do not apply. The convention provides a list of criteria to be used by the presiding court to ascertain whether the judgment is indeed eligible for recognition and enforcement.
But the convention excludes certain matters from its scope, such as the status and legal capacity of natural persons, family law matters, privacy, intellectual property, and certain anti-trust matters. Nor does it apply to arbitration and related proceedings. And now we’re getting close to familiar territory. As with many international treaties or regulations, certain insolvency matters are also excluded.
Article 2(1)(e) Hague Judgment Convention excludes from the scope of the convention “insolvency, composition, resolution of financial institutions, and analogous matters”. It is of interest to examine what is meant by this phrase, where the convention has recently come into force in many countries, and to see how the convention approaches preventive restructuring frameworks, which have been implemented in all EU member states over the past three or four years.
First, its entry into full force. A minimum of two ratifications by signatory states is required for the convention to enter into legal effect. That threshold was crossed when the EU and Ukraine both ratified in August 2022, and the entry date of the convention was September 2023. The convention only applies in legal proceedings commenced on or after the relevant entry-into-force date for the applicable jurisdiction. Countries that have signed but not ratified (e.g. the US and Russia) are not bound and the convention is not legally effective between them and any other state.
Uruguay ratified on 1 September 2023, triggering an entry-into-force date of 1 October 2024. The United Kingdom ratified in June 2024 and it entered into force on 1 July 2025, applying only in England & Wales after the UK made a declaration that it excluded Scotland and Northern Ireland.
So, it’s all very fresh law!
Second, what is the scope of the insolvency exclusion? In an explanatory report on the convention written by Francisco Garcimartín (Spain) and Geneviève Saumier (Canada) the following explanations are given.
The term “insolvency” covers bankruptcy of both natural persons and legal persons. It includes the winding up or liquidation of corporations in insolvency proceedings. The winding up or liquidation of corporations for reasons other than insolvency is dealt with in another exclusion of the scope of the convention Article 2(1)(i) (“the validity, nullity, or dissolution of legal persons or associations of natural or legal persons, and the validity of decisions of their organs”). Note that Article 2(1)(q) also excludes sovereign debt restructuring through unilateral state measures.
The second term in the cited exclusion is “composition”. It refers to proceedings where the debtor enters into an agreement with its creditors to restructure or reorganise a company to prevent its liquidation, which mirrors what is happening during preventive restructuring frameworks if they are implemented in EU member states based on the Preventive Restructuring Directive 2019/1023. The explanatory report submits that these agreements usually imply a moratorium on the payment of debts and a discharge, but adds: “Purely contractual arrangements – i.e., voluntary out-of-court agreements – are, however, not covered by the exclusion”.
The scope excludes “resolution of financial institutions”. Resolution in the terminology of crisis management and insolvency-type measures of financial institutions generally refers to the legal framework enacted in many jurisdictions to address the risk of failure of financial institutions. The measures available often include liquidation and depositor reimbursement, transfer or sale of assets and liabilities, establishment of a temporary bridge institution, and a write-down or conversion of debt to equity. These all is subject to other (European or global) rules and can be seen as administrative. And Article 1(1) of the convention provides that the convention shall not extend “… to revenue, customs or administrative matters”. Nevertheless, it is included in the text of the exclusions, just to be sure.
The last term in the bankruptcy exclusion is “analogous matters”. The expression is used to cover “… a wide range of other methods whereby insolvent or financially distressed persons are assisted to regain solvency while continuing to trade”. That, indeed, seems very broad. The explanatory report starts with a rather limited interpretation by submitting that judgments directly concerning insolvency are excluded, which applies if the right or the obligation that was the legal basis of the action in the state of origin was based on rules pertaining specifically to insolvency proceedings, rather than general rules of civil or commercial law. If the action derives from insolvency rules, the exclusion precludes the circulation of the judgment under the convention. But if the action derives from civil or commercial law, the judgment may circulate. The report carefully draws the lines. It suggests the courts of the requested state may consider the following criteria when deciding whether the judgment was based on insolvency rules: (i) whether the judgment was given on or after the commencement of the insolvency proceedings, (ii) whether the proceedings from which the judgment derived served the interest of the general body of creditors, and (iii) whether the proceedings from which the judgment derived could not have been brought but for the debtor’s insolvency.
The report concludes to say that, for example, the convention does not apply to judgments opening insolvency proceedings and concerning their conduct and closure, the approval (confirmation) of a restructuring plan, the setting aside of transactions detrimental to the general body of creditors or on the ranking of claims. The convention however does apply to judgments on actions based on general commercial law, even if the action is brought by or against a person acting as insolvency administrator in one party’s insolvency proceedings. An example being a judgment on actions for the performance of obligations under a contract concluded by the debtor, or actions on non-contractual damages.
In the explanatory report it is admitted that the application of the convention is of limited effect in cases where the judgment debtor is in insolvency proceedings. Accordingly, if a judgment is favourable to the insolvent debtor’s counterparty, the judgment may be affected by the insolvency proceedings. The judgment creditor may seek recognition and enforcement of the judgment under the convention in the jurisdiction where insolvency proceedings are commenced; it will, however, only receive payment through the insolvency process or reorganisation plan.
Now to the question. In general, “insolvency” is excluded, although the tiresome question about the interpretation of the exclusion (compare the exclusion of Article 1(2) Brussels Ibis) may pop up again. Is the Hague Judgment Convention 2019 applicable to national preventive restructuring cases? Only in very limited cases. Only from countries that have a commercial law/civil law (non-insolvency) basis for a court-sanctioned process allowing a company to restructure debt or capital with creditors and/or shareholders. A source suggested the Irish scheme of arrangement (Company Act 2014, Part 9) may fall under the convention. Maybe a Cyprus based scheme would too? What about recognition even when there is a breach of the famous Gibbs rule? Or can recognition or enforcement under the Hague Convention be refused, based on public policy grounds, in that the judgment in question constitutes a manifest breach of a rule of law regarded as essential in the legal order of the state in which enforcement is sought or of a right recognised as being fundamental within that legal order. Would the Gibbs rule be so important?
For the theme discussed here, the convention only has a limited impact. It only covers recognition and enforcement, not other matters (applicable law; cross-border cooperation, etc.). It also has numerous caveats and exclusions, allows for numerous unilateral refusals of recognition and enforcement. Moreover, it does not authorise a general oversight court (such as the Court of Justice of the EU, the CJEU) to ensure a uniform application. Be that as it may, preventive restructuring frameworks rely on creative lawyers designing restructuring plans. In some cases, with certain individual matters, such as preservation measures or a part of a plan in a parallel process, the convention may offer assistance.
References
Convention on the Recognition and Enforcement of Foreign Judgements in Civil and Commercial Matters, from the Hague Conference on Private International Law. All referenced documents are available via https://www.hcch.net/en/home
This is a slightly adapted version of a regular column Bob Wessels is writing for Global Restructuring Review (GRR) on the topic of cross-border restructuring and insolvency in a European context. GRR is a subscription-only publication and the column appeared in GRR on 28 July 2025. See www.globalrestructuringreview.com.