Will the Hague Convention of 2019 improve the resolution of international disputes?
On 2 July 2019, at the Hague Conference on Private International Law, the conclusion of a new international convention was announced: the Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters. It complements the 2005 Hague Convention on Choice of Court Agreements.
Purpose of the convention
The convention is intended to harmonise the rules for recognition and enforcement of foreign judgments in civil or commercial matters. An enforceable judgment of a court in a contracting state will have to be recognised and enforced by other contracting states without reviewing the merits of the judgment.
Importantly, the convention is open for signature by both EU member states and other countries. So far, only two countries have ratified the convention: Ukraine and Uruguay. In our view, the number is so small because the scope of the convention is similar to that of the EU’s Brussels I bis Regulation (1215/2012) on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, which introduced automatic enforceability of judgments given in another EU member state, without any prior declaration of enforceability in separate proceedings. The 2019 Hague Convention is intended to have the same effects in all ratifying countries.
International disputes covered by the convention
The scope of the convention includes any decision on the merits given by a court, including a decree or order, as well as decisions relating to costs of the proceedings. Decisions on provisional and protective measures, which the convention does not regard as “judgments,” are excluded from the scope of the convention.
Furthermore, the convention only covers civil and commercial matters and does not apply to revenue, customs or administrative matters, even if they are of an international nature. The convention also excludes such matters as insolvency and composition of financial institutions, carriage of passengers and goods, intellectual property, and certain antitrust issues. The convention does not apply to disputes resolved in arbitration or by other ADR methods.
Rules for enforcement and recognition of judgments under the 2019 Hague Convention
Art. 5 of the convention specifies the cases where a judgment will be eligible for recognition and enforcement in another contracting state. It conditions enforcement and recognition of a judgment on a number of circumstances. A judgment will be recognised and enforced in another state if, for example:
- The person against whom recognition or enforcement is sought was habitually resident in the state of origin at the time that person became a party to the proceedings in the court of origin
- The defendant expressly consented to the jurisdiction of the court of origin in the course of the proceedings in which the judgment was given, or
- The judgment ruled on a contractual obligation and was given by a court of the state in which performance of that obligation took place or should have taken place.
However, a judgment that ruled on rights in rem in immovable property shall be recognised and enforced if and only if the property is situated in the state of origin of the judgment.
The convention also provides for grounds for refusing recognition or enforcement. Under Art. 7, recognition or enforcement of a judgment may be refused if:
- The document instituting the proceedings (or equivalent document) was not notified to the defendant in sufficient time and in such a way as to enable them to arrange for their defence, or
- The judgment was obtained by fraud or is manifestly incompatible with the public policy of the state in which recognition or enforcement is sought.
Recognition or enforcement of a judgment may also be refused if the proceedings were contrary to an agreement by which the parties submitted the dispute to another court for determination, or if the judgment is inconsistent with another judgment between the same parties.
Under the convention, unless otherwise provided, the procedure for recognition and enforcement of the judgment is to be governed by the law of the requested state. The convention also stipulates that the courts will not refuse enforcement or recognition of a judgment on the ground that enforcement or recognition should be sought in another state.
In particular, the convention aims to improve access to justice by introducing provisions to facilitate the process of recognition and enforcement of foreign judgments in both civil and commercial matters. For contractual disputes, this should increase the efficiency and transparency of dispute resolution.
The convention is also intended to promote better management of the risks of transactions and judicial proceedings, and provide a more efficient and cost-effective way of resolving disputes.
However, achievement of these objectives will depend on the number of the countries ultimately deciding to ratify the convention. If further ratifications take place, it can be expected that the convention will contribute to reducing the time taken to recognise and enforce judgments in other jurisdictions, which is particularly important in international trade.
Dr Marta Kozłowska, attorney-at-law, Litigation & Arbitration practice, Wardyński & Partners