An Update on COCA
Posted on April 30, 2013
Where do things stand with the ratification of the Hague Choice Of Court Agreements Convention? I attended a talk on Friday that outlined where we are and how we got here. I am not going to give the details of the talk or even identify the speakers, but I thought it would be useful to summarize the situation.
First, what is the Convention? COCA, as it is known, is roughly speaking an analogue to the New York Convention. When parties have agreed to have a dispute heard in the courts of one of the contracting states, then that states’ courts have jurisdiction to hear the case, other states’ courts must suspend or dismiss the case if it is brought there, and each state must recognize the resulting judgment subject to a short list of defenses the judgment debtor can raise. This is of course a real oversimplification, there are exceptions, etc. But in a nutshell, that’s what the Convention does.
The Convention itself seems to have universal or near-universal support in the United States. What’s not to like? But although the US signed the Convention during the Bush administration, The President has not yet been submitted to the Senate for its advice and consent as to ratification. The hold-up stems from a disagreement about how the Convention should be implemented in our federal system (everyone seems to agree that we should not seek to treat the Convention as self-executing).
There seem to be three basic approaches:
- The federal-only approach. Under this approach, Congress would enact implementing legislation closely analogous to Chapter 2 of the Federal Arbitration Act, which implements the New York Convention. Recognition of foreign judgments under COCA would be governed by the federal statute. There might or might not be room for the application of state law on questions relevant to the decision whether to recognize the foreign judgment. There might or might not be room for concurrent jurisdiction in the state and federal courts. In short, the gist of this proposal is a federal statute analogous to the FAA that would govern in all cases falling under the Convention. This approach was outlined in a memorandum of the Legal Adviser earlier this year and is also supported by “representatives of the New York State Bar Association International Section, the New York City Bar Committee on International Commercial Disputes, the Maritime Law Association, and a number of other practitioners and academics.” As far as I can tell it is not currently the preferred approach of the State Department, but the State Department might support it if a deal on cooperative federalism, outlined below, can’t be reached.
- The State Department’s cooperative federalism approach. Under this approach, set out in a Legal Adviser white paper, Congress would enact a federal statute governing recognition, and that statute would preempt state law, but only to the extent a state had failed to enact its own statute or the state’s statute would lead to a different outcome than the federal statue. The distinctive feature of this approach is that if the action for recognition of the foreign judgment was brought in a federal court, the court would apply the federal statute in the first instance rather than applying the state statute and then determining whether there was a basis for preemption of state law. This approach is supported by the State Department, the New York State Bar Association International Section, the New York City Bar Committee on International Commercial Disputes, and a majority of the polled members of the Section of International Law of the American Bar Association.
- The Uniform Law Commission’s cooperative federalism approach. This approach is essentially the same as the State Department’s approach, except that the federal court would apply the state statute, if one exists, in the first instance, and only apply federal law to the extent preemption is required. This approach is supported by the Uniform Law Commission.
Now you might ask—particularly if you are a businessperson or a non-US lawyer—why the ULC has refused to go along with the white paper approach? The difference between the two approaches seems purely formal, since a state court, even under the ULC’s approach, could apply state law only to the extent it did not conflict with or lead to a different outcome than federal law. So what are we talking about, here? Is this not a case of dancing angels on pinheads? The ULC believes, however, that the white paper approach is inconsistent with the historical balance between state and federal authority. I have to say I don’t see the force of this argument, given that we are dealing with a treaty obligation and the ULC itself says it wants to see the Convention ratified. The Convention itself, not the details of how it is implemented, is what works a shift away from state authority to decide what judgments should be recognized toward federal authority to decide what judgments should be recognized. But as a practical political matter, the ULC’s argument has some force insofar as there is a good amount of opposition in certain American political circles in 2013 to anything that could be construed as federal overreaching, which is probably compounded by the dislike in certain American political circles in 2013 of treaties, international law, and so forth. In short—all is for naught if the Convention cannot get the support of sixty-seven senators.
My own view on this is probably that the FAA approach is best, because nothing in the real world turns on whether a court applies a federal law in the first instance or applies state law in the first instance but then finds the state law preempted if it conflicts with the federal law. Why create more complication? But I think that precisely because the ULC approach is essentially the same in outcome as the State Department approach, it should not be regarded as unacceptable. In short, I would hate to see COCA derailed because the federal government and the states decide to use this disagreement as a proxy for wider disagreements about state and federal authority. Let’s get the thing implemented and ratified, even if it means making do with the baroque approach the ULC demands.