The Hague Convention on Choice of Court Agreements (The Hague Convention) enables global judgment enforcement. It has been ratified by 32 States. Among them are all EU member states, the United Kingdom, Singapore, and Mexico. Other States such as the United States and China have already signed it. As it provides for global judgment enforcement, the Convention is nothing short of groundbreaking for deal negotiations and litigation tactics. This article outlines two key conclusions in this regard.
The core rule in The Hague Convention is its Article 8 on global judgment enforcement. It states:
“A judgment given by a court of a Contracting State designated in an exclusive choice of court agreement shall be recognised and enforced in other Contracting States in accordance with this Chapter. Recognition or enforcement may be refused only on the grounds specified in this Convention.”
The triggers for this global judgment enforcement are few:
It is no secret that The Hague Convention has been negotiated to make litigation more attractive in times where arbitration has almost become the default mechanism for resolving international disputes (just as the recent movement for “international commercial courts” in Paris, Singapore, and Baden-Württemberg, with specialized judges offering proceedings in the English language).
A key “asset” of international commercial arbitration is the 1958 Convention on the Recognition and Enforcement of Arbitral Awards (the New York Convention, after the city where it was signed). The New York Convention allows to enforce arbitral awards in 168 States.
Therefore, The Hague Convention resembles the mechanism of The New York Convention. Just as The New York Convention, The Hague Convention contains the general rule that decision must be enforcement abroad (Article III New York Convention, Article 8 The Hague Convention, quoted above). And just like the New York Convention, The Hague Convention contains only a limited catalogue for grounds under which recognition and enforcement can be refused.
The key is protection against enforcement under The Hague Convention is more limited than under the York Convention.
New York Convention
The Hague Convention
(Judgments based on Choice-of-Court Agreements)
Jurisdiction of original tribunal
Enforcement court can review arbitration agreement in full (Art. V(1) lit. a)
Enforcement court can review choice-of-court agreement “UNLESS THE CHOSEN COURT HAS DETERMINED THAT THE AGREEMENT IS VALID” (Art. 9 lit. a, emphasis added)
Procedure violated party agreement
Enforcement court can reject enforcement (Art. V(1) lit. d)
[NOT ADDRESSED in Convention]
Procedure violated due process
Enforcement court can reject enforcement (Art. V(1) lit. b)
[NOT ADDRESSED in Convention]
Enforcement court can reject enforcement if “enforcement of the award would be contrary to public policy” (Art. V(2) lit. b)
Enforcement court can reject enforcement if “recognition or enforcement would be MANIFESTLY incompatible with the public policy of the requested State” (Art. 9 lit. e, emphasis added)
Therefore, during transactions, one must necessarily decide between arbitration and choice-of-court agreements with a view to enforcement.
There will be no one-size-fits-it-all solution. In particular, the answer is not as simple as “judgments are now easier in enforcement.” Tailor-made solutions are required. Important considerations will be:
When a respondent is served with a notice of claim by a court from a Hague Convention State, the tactical considerations may exceed the mere defense in court.
Respondents may need to initiate parallel litigation. The reason is Article 9 of The Hague Convention. As per this provision, enforcement courts abroad will not review the initial court’s jurisdiction if:
“the chosen court has determined that the [choice-of-court] agreement is valid” (Art. 9 lit. a).
That is, The Hague Convention intends respondents to have only one shot at objecting to jurisdiction, namely before the very court whose jurisdiction under the choice-of-court agreement is concerned.
However, The Hague Convention provides for an additional defense mechanism for respondents:
It may be put into question whether this incentive for parallel litigation was desired by The Hague Conference, or is indeed desirable. But it is what The Hague Convention presses respondents into. As often, the right tactics will depend on the particular dispute.