The 2005 Hague Convention on Choice of Court Agreements (the “Convention”) entered into force on 1 October 2015. It is now binding for Mexico and, with the exception of Denmark, all other 27 EU members.
Nature and Application
The Convention applies to exclusive choice of court agreements concluded (and proceedings commenced) after its entry into force. An exclusive choice of court agreement is an agreement in writing, by two or more parties, designating the courts of one contracting State to the exclusion of the jurisdiction of any other court.
The Convention does not apply to consumer or employment contracts. Various subject matters are excluded, such as family law, wills and succession, insolvency, carriage of passengers and goods, maritime claims, anti-trust, liability for nuclear damage, personal injury claims, certain tort claims unrelated to a contractual relationship, and intellectual property rights.
Operation of the Convention
The Convention establishes three basic rules:
- The chosen court must hear the case. There is no discretion. The doctrine of forum non conveniens in favor of courts of another State does not apply.
- Any court not chosen is prohibited from exercising jurisdiction.
- Any judgement rendered by the chosen court of a contracting State must be recognized and enforced by the courts in any other contracting State.
The procedures for recognition and the actual enforcement of the judgment are generally governed by the law of the requested State. There is no review of the merits. The enforcing court is bound by the factual findings on which the court of origin based its jurisdiction, unless the judgment was given by default.
Recognition or enforcement may be refused under certain circumstances, for instance if the agreement was null and void under the law of the State of the chosen court, a party lacked the capacity to conclude the agreement under the law of the requested State, the defendant was not given adequate notice, the judgment was obtained by fraud, recognition or enforcement would be manifestly incompatible with the public policy of the requested State, the judgment is inconsistent with a judgment given in the requested State in a dispute between the same parties, or the judgment is inconsistent with an earlier judgment given in another State between the same parties on the same cause of action.
The Convention does not govern interim measures of protection; it neither requires nor precludes such measures by a court of a contracting State and does not affect whether or not a party may request or a court should grant, refuse or terminate them. Since there is no lis pendens provision, the proverbial “race to the courthouse” is a possibility. Having said that, the Convention does not affect the application of pre-existing conventions, including the Recast Brussels Regulation – which does contain a lis pendens provision.
The United States and Singapore have signed the Convention but not yet ratified. Time will tell whether the Convention becomes the “litigation twin” to the extremely successful New York Convention regarding foreign arbitral awards.