On October 1, 2015, the Hague Convention of 30 June 2005 on Choice of Court Agreements came into force in 28 States, namely in Mexico and all member states of the European Union – with the traditional exception of Denmark, which continues its isolationist policy in jurisdictional matters. The Convention thus comes into force a little over 10 years after it was signed in 2005, as the result of the European Union’s approval earlier this year. It remains to be seen whether its entry into force creates some momentum amongst other states to follow. From a European perspective, the United States’ ratification would have the biggest practical impact.
The United States (and Singapore) signed the convention, but have not yet ratified it. The United States appear to be prepared in principle to put the Convention into force as well, but need to agree on how to implement it internally. As Ted Folkman at Letters Blogatory has put it: “an argument about the role of US state and federal law in the implementation of [the Convention], which must be mystifying to the rest of the world, has delayed US ratification of the Convention.”
For those who are interested, a 2013 Memorandum of the Legal Adviser to the State Department on the implementation of the Convention sets out the challenges that the US federal legal system faces in this respect. In my layman’s words, the choice appears to be between a “cooperative federalism approach”, which leaves a role for the states to opt out of Federal rules implementing the Convention, and the “federal-only approach”, where Congress would enact implementing legislation closely analogous to the Federal Arbitration Act. Ted Folkman believes that in practice, there is hardly any difference between the approaches: “In short, I would hate to see [the Convention] derailed because the federal government and the states decide to use this disagreement as a proxy for wider disagreements about state and federal authority. Let’s get the thing implemented and ratified, even if it means making do with the baroque approach the ULC [Uniform Law Commission] demands.” Watch this space for future developments.
The Choice of Courts Convention was negotiated and agreed between a group of countries and trading blocks such as the EU, the United States, Canada, Japan, China, Russia, all of them members of the Hague Conference on Private International Law (HCCH) that develops multilateral legal instruments. It is built upon the following basic principles:
- 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 as defined in the Convention exists (Arts 8 and 9).
The last principle does not add much within Europe, where the Brussels Regulation applies. It is, however, particular relevance in relation to jurisdictions such as the United States, where currently no multilateral or bi-lateral agreement on the recognition and enforcement of judgments exists.