Update on the Preparations for Work on a Judgments Convention
Posted on April 24, 2012
As many readers will know, the Hague Convention on Choice of Court Agreements, concluded in 2005 but not yet in effect, provides a mechanism, for enforcement of a written choice of court agreement parties make in a civil or commercial matter, and for recognition and enforcement of the judgment that results from litigation in the chosen court. Although the Choice of Court Convention is still in its infancy (Mexico has acceded to it; the United States and the European Union have signed but not ratified it; no other state has signed), the Hague Conference is beginning to set the stage for work on a generalized Judgments Convention—a convention governing recognition and enforcement of foreign judgments whether or not the parties have made a choice of court agreement. I want to draw readers’ attention to Preliminary Document 5, dated March 2012, in advance of a meeting of an expert group that was, as far as I know, held from April 12 to 14. According to the document, the following states and organizations were invited to send delegates: Argentina, Australia, Brazil, China, Costa Rica, Egypt, the European Union, India, Japan, Russia, Switzerland, South Africa, the United States, and New Zealand. (N.B. If you attended the meeting or heard about it through the grapevine, or if you attended the meeting at the State Department in advance of the expert group meeting, please let me know! I’d like to hear from you!)
Much of the Preliminary Document is taken up with a consideration of the various forms a new Convention might take, and in particular, with the question of whether a convention should set out rules for recognition and enforcement only or whether, on the other hand, a convention should make rules about jurisdiction—a much more controversial step. These portions of the document are worth a read just to get a sense of the kinds of issues that may arise if the Hague Conference proceeds further towards a new Convention. I want to point out another highly interesting part of the document: Paragraphs 17 and 18, which notes some of the difficulties that parties face today and that motivate preparatory work towards a new Convention:
17. The difficulties faced by companies and individuals engaging in cross-border transactions is evidenced in a number of recent cases that have come to the attention of the Permanent Bureau. In the United States, proceedings continue regarding the “Chevron case”, a highly publicised lawsuit in which, leaving many ramifications aside, the plaintiffs obtained a foreign money judgment against Chevron in Ecuador and are now attempting to enforce the judgment in the United States. Also in the United States, a 2009 case marked a “milestone” as the first time that a United States court recognised a judgment from the People’s Republic of China. 1 However, despite the ultimate decision in favour of recognition, the fact that it took 15 years from the date of injury before the China-based plaintiffs obtained recognition demonstrates the existence of substantial barriers when a judgment is obtained abroad. Cases from other jurisdictions also evidence such difficulties, which arise in a number of different contexts. In Australia for example, a case heard by the Supreme Court of Victoria considered the future enforceability of an Australian judgment in the People‟s Court of China as a relevant matter in deciding how much security for costs should be ordered. In another case, the Australian Federal Court looked at the reciprocal enforceability of civil judgments rendered in the United Arab Emirates and Australia in denying an application for an antisuit injunction, effectively permitting the applicant to continue related civil proceedings in both States. These cases demonstrate the inherent difficulties and additional expenses faced by litigants who need to enforce judgments abroad.
18. The above sample of case law evidences the benefits that could be gained from a global instrument that addresses the recognition and enforcement of foreign judgments in civil and commercial matters.
The Chevron/Ecuador case, which the Preliminary Document references, provides an interesting sanity check as we think about whether a Judgments Convention is sensible. In light of Chevron/Ecuador, and as the United States’s influence in transnational litigation decreases, 2 it is difficult to imagine United States businesses likely to be subject to international tort litigation—we are talking mostly about tort cases here, since the Choice of Court Convention, when it comes into effect, will provide parties to transnational contracts with autonomy to choose their own forum—supporting a new Convention, unless it had exceptions to a general rule of recognition and enforcement similar to the exceptions now found in the Uniform Acts in effect in most American states today, or unless the Convention only came into force between the United States and the states whose judgments our courts are already likely to recognize. In short, I find it difficult to envision the Senate ratifying a treaty that requires the US courts to recognize, say, Ecuadoran judgments with fewer caveats and exceptions than we have in the present law. To be sure, American nationals and companies could benefit from easier enforcement of US judgments abroad. But then, it is difficult to imagine foreign firms being enthusiastic about the prospects of greater exposure to the US tort system. In short, I see the potential for a lot of interests to line up against a convention with real teeth. Time will tell.