Volume 42 | Number 3 Summer 2007
Page 2 of 8
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I. Introduction
The Convention on Choice of Court Agreements,1 adopted at the twentieth session of the Hague Conference on Private International Law on June 30, 2005, is an important step toward international harmonization of national conflicts rules on forum selection clauses. The Convention both strives to ensure the recognition and enforcement of international choice of court clauses in the context of international business by providing uniform rules, and validates the parties’ choice of forum as the single basis for jurisdiction. At the same time, it provides sufficient safeguards for governmental interests and for rendering and enforcing courts.
It is worth recalling that the United States Supreme Court had validated party autonomy as early as 1972 in M/S Bremen v. Zapata Off-Shore Co.,2 by giving effect to “the legitimate expectations of the parties, manifested in their freely negotiated agreement, by specifically enforcing the forum clause.”3 By eliminating uncertainties regarding the place of suit by forum selection in advance, such contractual stipulations were found by the Court to constitute an “indispensable element in international trade, commerce, and contracting.”4
The Court approved of what it called a recent trend in adopting “a more hospitable attitude” toward choice of forum clauses, and called upon federal district courts sitting in admiralty to follow this as “the correct doctrine.”5 The Court established a reasonableness test to determine the validity of forum selection clauses, as it held that “such clauses are prima facie valid and should be enforced unless enforcement is shown by the resisting party to be ‘unreasonable’ under the circumstances.”6 A strong showing could indeed be made for setting aside the forum selection clauses “for such reasons as fraud or overreaching” or if the enforcement would be “unreasonable and unjust” or contrary to “a strong public policy of the forum.”7 The Bremen Court’s reasoning that “[w]e cannot have trade and commerce in world markets and international waters exclusively on our terms, governed by our laws, and resolved in our courts,”8 would certainly apply equally in every other country.
Bremen was a case in admiralty; although both federal and state courts have generally followed the Bremen holding in non-admiralty cases as well. However, were the U.S. to become a contracting party to the Choice of Court Convention, the Convention may have impact, not only on cases in U.S. courts involving international forum selection clauses, but eventually even in the domestic setting as jurisdictional law may be harmonized by federal legislation.9
Although the Hague Convention was adopted in June 2005, the actual drafting of the document began at the Hague Conference in 1992 with the United States’ initiative to create a global convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters.10 The United States’ interest in such a convention is driven by the obvious need it perceives for a legal structure to “support the growth of global markets” and promote international cooperation.11 Moreover, since the United States is not a party to any treaty—bilateral or multilateral—on recognition and enforcement of foreign judgments, the U.S. finds itself at a major disadvantage, for re-litigation becomes a prerequisite for the enforcement of U.S. judgments abroad. The U.S. courts are perceived to be more hospitable to the enforcement of foreign judgments than foreign courts are to U.S. judgments.12
The negotiation process was lengthy and cumbersome. A Preliminary Draft Convention on Jurisdiction and Foreign Judgments in Civil and Commercial Matters was finally adopted at the October 1999 meeting of the Hague Conference,13 which generally mirrored in its structure and content the prior European Union instruments on the topic—the Brussels Convention of September 27, 1968,14 and the Lugano Convention of September 16, 1988.15 Subsequent consultations showed serious differences among the delegates on the text of this ambitious project, parts of which had been adopted by narrow majorities and, consequently, would not have received wide approval.
A lack of consensus on the text was coupled with the concern that in the era of special issues raised by e-commerce and intellectual property rights, the rules based on the Brussels and Lugano conventions, adopted so long ago, would not meet contemporary needs. Thus, formal negotiations on the 1999 draft were suspended.16 Subsequent informal discussions between 2000 and 2002 led to the realization that a consensus could not be reached on a global convention of such a wide scope as envisaged earlier; the decision was made to scale down the project and use a “bottom-up-approach,” starting with choice of court clauses on business-to-business cases, on which there already was broad agreement.17 After several sessions of an informal working group during 2002-2003, the group prepared a draft that it submitted to the Commission on General Affairs and Policy of the Hague Conference in April 2003. The Commission met in December 2003 and April 2004 and produced a Preliminary Draft Convention, and, after further deliberations and work, a diplomatic session convened in June 2005 unanimously adopting the Convention.18
Three basic rules that ensure the effectiveness of the Hague Convention form its core. First, the court specified by an exclusive and valid choice of court agreement must hear the case.19 Second, pursuant to limited exceptions, all other courts must suspend or dismiss the case.20 Third, the resulting judgment of the chosen court must generally be enforced by courts in other Contracting States.21 In addition to these three rules, the Convention contains a fourth optional rule on reciprocal declarations, that Contracting States may declare that they will recognize and enforce judgments of other Contracting States resulting from non-exclusive choice of court agreements. These provisions will be elaborated later.
This discussion will begin in the next section on the scope of the Convention. The third section will review the jurisdictional issues, which will then lead to a section on recognition and enforcement. Selected issues will be discussed next, and issues related to the Convention’s implementation in the United States will be reviewed after that. The final section will cover an appraisal of the Convention.