European Union: Progress on the Choice of Court Convention

The headline of Friday’s press release was a bit too much, for my taste: “Choice of Court Convention: EU businesses receive a major boost for international trade”, the EU Commission claimed. EU Justice Commissioner Martine Reicherts hailed the Court Convention as “a great example of how justice policy serves to boost economic growth and job creation by creating the right conditions for European businesses to flourish in their trading with non-European Partners.”

I would be curious to see some data and an econometric analysis to verify this claim. I tend to see the topic of choice of law agreements as a highly technical procedural issue – of great practical relevance, yes, but unlikely to directly influence the behaviour of private parties. This notwithstanding, it is good to see that progress is being made with the Court Convention, or Convention on  Choice of Court Agreements by its full name.

So what happened since we last posted on the issue? The EU Justice Ministers last week approved a decision ratifying the Choice of Court Agreements Convention. As a next step, following the approval by Member States, the consent of the European Parliament will be obtained. If it gives its accord, the decision will be finally adopted by the Council and enter into force in the European Union.

Here is, in a nutshell, what the Court Convention is about: The Hague Convention on Choice of Court Agreements, concluded way back on June 30, 2005, is aimed at ensuring the effectiveness of choice of court agreements (also known as “forum selection clauses”) between parties to international civil and commercial transactions. To achieve this goal, it defines three basic rules that give effect to choice of court agreements:

  • The chosen court must in principle hear the case (Art. 5);
  • Any court not chosen must in principle decline to hear the case (Art. 6); and
  • Any judgment rendered by the chosen court must be recognised and enforced in other Contracting States, except where a ground for refusal applies (Arts 8 and 9).

The Choice of Courts Convention was negotiated and agreed between a group of countries and trading blocks such as the EU, the United States (see here for Ted Folkman’s thoughts from a U.S. perspective), Canada, Japan, China, Russia, all of them members of the Hague Conference on Private International Law (HCCH) that develops multilateral legal instruments. The recent reform of the EU’s own jurisdictional rules, contained in the Brussels I Regulation, will ensure coherence between the EU’s own rules and the Convention – once it enters into force. The path to implementation is set out in the HCCH check list.

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