United States: New Hague Convention Seeks To Facilitate Global Enforcement Of Judgments

On July 2, 2019, the delegates of the 22nd Diplomatic Session of the Hague Conference on Private International Law (“HCCH”) finalized and adopted a new multilateral treaty, the 2019 Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (the “2019 Enforcement Convention”), which obliges contracting states to recognize and enforce civil and commercial judgments rendered in another contracting state. It remains to be seen whether states will sign and ratify the 2019 Enforcement Convention in significant numbers.

Background

Established in 1893, the HCCH is an intergovernmental organization working on private international law issues and is responsible for forty-one international conventions, protocols, and soft law instruments, including, notably, the Convention of 15 November 1965 on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters, the Convention of 18 March 1970 on the Taking of Evidence Abroad in Civil or Commercial Matters, and the Convention of 30 June 2005 on Choice of Court Agreements. Today, 82 states and the European Union are HCCH members.

The 2019 Enforcement Convention is the culmination of almost thirty years of work. In 1992, the HCCH first considered proposals to establish a uniform set of rules on court jurisdiction and the recognition and enforcement of judgments in cross-border civil and commercial cases. In 2013, an HCCH Working Group began considering proposed language for a convention on the mutual recognition and enforcement of judgments, and completed an initial draft in October 2015, which was revised in May 2018. In June 2019, HCCH members debated the final text of the 2019 Enforcement Convention, which was formally adopted on July 2.

Features of the 2019 Enforcement Convention

The 2019 Enforcement Convention obliges contracting states to recognize and enforce civil and commercial judgments rendered in another contracting state. The principal obligation is found in Article 4, which provides: “a judgment given by a court of a Contracting State (State of origin) shall be recognised and enforced in another Contracting State (requested State) in accordance with [Chapter II of the Convention].” “Civil and commercial judgments” are final judgments, whether money or non-money judgments.

Broadly, the types of judgments that must be recognized fall into three groups: (a) judgments where there is a connection between the state of origin and the defendant; (b) judgments where the state of origin’s jurisdiction was based on express consent; or (c) judgments where there is a connection between the claim and the state of origin (e.g., as the place of performance of the contract). There are a number of exclusions, including judgments relating to family law matters, wills, insolvency, defamation, privacy, and intellectual property. In addition, the 2019 Enforcement Convention excludes arbitration and related proceedings.

The 2019 Enforcement Convention sets out in Article 7(1) the exclusive bases on which recognition and enforcement may be refused, which include improper service, fraud, and manifest incompatibility with the public policy of the requested state.

At the adoption ceremony on July 2, 2019, Uruguay became the first state signatory. In order for the 2019 Enforcement Convention to come into force, one other country needs to sign and ratify it. Once in force, any state may accede to the 2019 Enforcement Convention.

Commentary

While the 2019 Enforcement Convention aspires to be a global regime, it is still too early to say whether or how soon this goal might be achieved. Given the vast differences in judicial systems, universal uptake is probably unlikely. Ultimately, the success of the 2019 Enforcement Convention will have to be judged against the success of its arbitration counterpart, the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which, at the time of writing, has 159 signatory countries. For now, it remains safe to say that international arbitration will remain the dispute resolution method of choice for cross-border contracts for the foreseeable future.

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP. All rights reserved

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