October 16, 2014

Hague Choice of Court Convention Approved by EU

The Convention will ensure recognition of exclusive choice of jurisdiction and court clauses in civil and commercial cases where the parties to a contract are located in two states that have ratified the Convention. The Convention should be considered as a supplement to the recognition of choice of jurisdiction clauses afforded by the Brussels I Regulation, as it also provides a legal framework by which parties located in the ratifying states can not only confer jurisdiction by agreement (which is common enough), but can also specifically nominate a Court or number of courts within that jurisdiction as the place where disputes must be resolved to the exclusion of any other.

The Convention applies recognition to those clauses which are concluded or documented (a) in writing; or (b) by any other means of communication which renders information accessible so as to be usable for subsequent reference (e.g. electronic mail and SWIFT). It is therefore chiefly concerned with claims in contract and specifically has no effect in respect to claims in: matrimonial, trusts, competition law, purely tort/delict and IP infringement law or in arbitration proceedings (inter alia).

Interestingly the Convention also states that the choice of court clauses are to be considered separate contracts to the agreement in which they are found and that the invalidity of the wider agreement does not necessarily invalidated the choice of court clause.

Article 5 of the Convention provides that the court(s) that are chosen by the parties shall have jurisdiction conferred on them unless that clause is null and void as a matter of the law of the country in which the court(s) are located. The chosen court(s) must not decline jurisdiction on the ground that the dispute should be decided in court of another state.

Article 6 of the Convention provides that the court(s) of a signatory state not chosen must suspend or dismiss proceedings that come before it if the parties have agreed to confer exclusive jurisdiction to the court(s) of another signatory state, unless: (a) the agreement is null and void in the law of the non-chosen state, (b) one of the parties lacked capacity (c) allowing the clause to be effective would lead to a manifest injustice or contrary to public policy in that state, (d) exceptional reasons beyond the control of parties make the agreement un-performable (e) the chosen court(s) decide not to hear the case.

The Convention expressly has no bearing on interim measures that a party can take against the other in the event of a breach of the choice of court or jurisdiction clause in the law of a ratifying state e.g. seeking an anti-suit injunction.

As of today’s date the signatories of the Convention are the EU, the USA and Mexico. This list and those eventually ratifying the Convention are likely to increase over the next few years and it is expected that individual EU Member States will follow rapidly if the long await USA/EU Free Trade Agreement is concluded.

For further information about the Convention, cross-border litigation and the enforcement of foreign judgments please contact David Bowman, Senior Associate of Royds LLP’s Dispute Resolution Department +00 44 207 583 2222.

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