Hong Kong – New Convention On Cross-border Recognition And Enforcement Of Civil And Commercial Judgments.

12 July, 2019

 

The final text of the Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (the Convention) was agreed on 2 July 2019.

 

The Convention promotes greater certainty in cross-border dealings and aims to reduce the timeframe for recognition and enforcement of judgments, by enabling the free circulation of judgments in civil and commercial matters across borders.

Uruguay became the first state to sign the new Convention, however it will only enter into force after it has been ratified by at least two contracting states.

 

Scope of the Convention

 

The Convention is applicable to judgments given by contracting state courts in civil and commercial matters. However, it does not apply to judgments from non-contracting state courts and it expressly excludes various types of matters including insolvency, defamation, privacy and intellectual property.

 

When will a judgment be recognised and enforced? 

 

The Convention identifies an exhaustive list of grounds for recognition and enforcement. If one of the grounds is met, the judgment is eligible for recognition and enforcement. However, if none of the grounds are met, it remains open to contracting state courts to recognise and enforce the judgment under domestic law.

 

The grounds for enforcement look to the connection between the state of origin of the judgment and the parties to, or subject matter of, the dispute. For example, a judgment will be eligible for recognition and enforcement where the defendant consented to the jurisdiction of the court of origin, where the defendant maintained a branch, agency or other establishment in the state of origin (and the claim arose out of the activities of that branch, agency or establishment) or where the defendant argued on the merits before the court of origin without contesting jurisdiction.

 

However, recognition and enforcement of judgments may (not must) be refused in certain circumstances. These include where the defendant was not notified of the claim in a sufficient time and manner as to enable them to arrange for their defence. Recognition and enforcement may also be refused on public policy grounds or where there was an agreement for the dispute to be determined by the courts of a state other than the state of origin.

 

The procedure for recognition and enforcement of judgments under the Convention is governed by the law of the state where the judgment is proposed to be enforced.

 

Impact of the Convention

 

The new Convention marks a large step forward after the 2005 Hague Convention on Choice of Court Agreements (the Choice of Court Convention), which is limited to the enforcement of exclusive jurisdiction agreements in civil and commercial matters, and judgments given by the courts designated by such agreements.

 

At present, the Choice of Court Convention has been ratified by Denmark, the European Union, Montenegro and Singapore. As we have previously reported, the United Kingdom has suspended its accession until after it has exited the European Union. Various other states, including the People’s Republic of China (PRC), have signed the Choice of Court Convention but must ratify it before becoming subject to its terms.

 

The success and impact of the new Convention will be dictated by the number of contracting states willing to sign and ratify it. Several Asian states were represented at the diplomatic session which agreed the text of the Convention, including the PRC, Singapore, South Korea and Japan.

 

If the new Convention is widely taken up, it could have a far-reaching impact on the ease and efficiency of cross-border recognition and enforcement of judgments, giving judgment creditors another route to enforce judgments more effectively in contracting states.