26 June, 2016
On 2 June 2016, Singapore ratified the Hague Convention on Choice of Court Agreements (Convention) becoming the first Asian country to join the Convention.
Introduction
The Convention will come into force between Singapore and other contracting states from 1 October 2016. Singapore follows Mexico and the European Union (it came into force in the United Kingdom on 1 October 2015) who have both ratified/acceded to the Convention. The United States signed the Convention on 19 January 2009 signalling an interest to ratify the Convention in the future.
The Convention came into force on 1 October 2015 and was designed to promote international trade and investment by encouraging judicial co-operation in multi-jurisdictional litigation, and the enforcement of foreign judgments.
This article discusses the purpose and operation of the Convention, and highlights issues which international litigators need to be aware of in light of the Convention's growing application.
The Convention
The Convention is designed to reduce the time and expense courts and businesses face when dealing with international jurisdictional issues, and the enforcement of decisions.
It applies to cases that are international in nature (Article 1) but also outlines several matters that do not fall within its scope of application. They include disputes about employment, consumer contracts, family law, insolvency and the validity of intellectual property rights other than copyright and related rights (Article 2).
There are three key features of the Convention:
First, where parties have stipulated an exclusive choice of court agreement in their contracts, the Convention requires that a court selected by parties must act in every case as long as the choice of court agreement is not null and void (Article 5). There is no discretion (on forum non conveniens or other grounds) in favour of courts of another State.
Secondly, the Convention provides that any other court seized but not chosen must dismiss the case unless the exceptions listed in the Convention apply (Article 6). A jurisdiction agreement is thus effectively enforced and avoids parallel proceedings.
A third key feature of the Convention is that it provides an international framework to recognise and enforce judgments. A judgment rendered by the court of a member State must be recognised and enforced by the courts of other member States (Article 8) unless one of the exceptions established by the Convention applies (Article 9).
The recognition and enforcement of judgments between those States are limited to judgments made by courts designated by the parties under the choice of court agreement.
The Convention and Other Treaties
The Convention is intended to apply compatibly with other international instruments that also govern jurisdiction and the enforcement of judgments (Article 26(1)).
However, in the event that all parties to a dispute are members of the European Union, provisions of the Brussels I Recast will take priority over the Convention (Article 26(6)(a)).
International Litigators Take Note
Given its growing significance, parties and lawyers involved in international litigation need to consider the application of the Convention.
In particular, international litigators need to bear in mind that:
- While the Convention is intended to only apply to parties who have selected an exclusive choice of court agreement, the Convention may in some circumstances treat a jurisdiction clause as exclusive even if it fails to expressly mention that it is exclusive in nature, as long as there are no words to the contrary (Article 3).
The recognition and enforcement provisions of the Convention is intended to mirror in a litigation context, the framework of the New York Convention 1958 which applies in arbitration.However, the Convention only extends to judgments resulting from courts designated in exclusive jurisdiction clauses.
Although the Convention contains recognition and enforcement provisions, it is to be distinguished from the Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters 1971 (1971 Convention).The latter is a multilateral treaty which seeks to promote more broadly mutual recognition and enforcement of judicial decisions (not limited to exclusive jurisdiction clauses), but it has not been widely ratified.However, the Hague Conference on Private International Law is currently working on a new international convention to regulate the jurisdiction and recognition of international judgments (Judgments Convention).If it comes to fruition, the new Judgements Convention will replace the 1971 Convention and is intended to complement the Choice of Court Convention.
In addition to the EU, Singapore's major trading partners such as China, Australia and New Zealand are also actively considering ratification of the Convention.It is therefore important to develop an awareness of the Convention.
For further information, please contact:
Prakash Pillai, Partner, Clyde & Co
prakash.pillai@clydeco.com
