In 1992, the United States proposed that a multilateral convention on recognition and enforcement of foreign judgments be negotiated at the Hague Conference on Private International Law (‘HCCH’). 27 years later, the ambition of that proposal was realised with the culmination of the so-called ‘Judgments Project’ at the 22nd Diplomatic Session of the HCCH in June and July of 2019.
The problem to which the Judgments Project was directed is the territorial limitations of judgments of domestic courts in respect of cross-border subject matter. A domestic court may assert jurisdiction over a transnational dispute, but the practical value of the resulting judgment will be limited if the judgment debtor or their assets is located outside of the territorial jurisdiction of the rendering court. The force of that judgment in a foreign place depends on principles of private international law of that place.
The private international law applicable to recognition and enforcement of foreign judgments differs around the world. The HCCH is an intergovernmental organisation which aims to reduce these kinds of conflicts through initiatives like the Judgments Project. Its mission, which it pursues on behalf of 82 member states and the European Union, is the progressive unification of private international law.
Progress on unifying the private international law applicable to foreign judgments has been slow moving. The United States’ proposal followed an unsuccessful 1971 Convention on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters, which attracted just five contracting parties. The HCCH’s focus in the 1990s was a more ambitious convention on both recognition and enforcement of foreign judgments and exercise of jurisdiction. That larger ambition failed. After a refocus in the early 2000s, consensus was reached on the primacy of party autonomy in this area, culminating in the 2005 Convention on Choice of Court Agreements. Broadly speaking, that convention is a court-based equivalent to the widely ratified New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. It deals with exercise of jurisdiction in the context of an exclusive choice of court agreement and enforcement of judgments premised on exclusive choice of court agreements.
The balance of the Judgments Project was picked up once again in the early 2010s. The HCCH dropped the subject of ‘direct jurisdiction’, at least for the time being, in favour of a narrower focus more likely to attract consensus. It pursued an instrument purely on recognition and enforcement of foreign judgments in civil or commercial matters. After making its way through a gauntlet of expert meetings, working group meetings, and Special Commission meetings, the Judgments Project came to a head at the HCCH’s 22nd Diplomatic Session in June and July 2019.
The HCCH Judgments Convention
On 2 July 2019, in the Great Hall of Justice of the Peace Palace, representatives of Member States signed the Final Act of the 2019 HCCH Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (‘HCCH Judgments Convention’).
The basic premise of the HCCH Judgments Convention is that contracting parties are obliged to recognise and enforce the foreign judgments of courts of other contracting parties which fall within the scope of the Convention. Contracting parties may only refuse to recognise or enforce those judgments on grounds specified in the Convention.
A variety of potentially ‘civil or commercial judgments’ are not subject to the basic premise. Family matters, wills and succession, insolvency, defamation, intellectual property, and certain anti-trust matters are just some of the matters beyond the scope of the Convention. While ‘money judgments’ are the usual focus of recognition or enforcement of foreign judgments, significantly, the Convention extends to non-money judgments.
The Convention sets out a laundry list of bases for recognition and enforcement which relate to the jurisdiction of the foreign court which produced the relevant foreign judgment. Many of these jurisdictional filters resemble the connecting factors which justify long-arm personal jurisdiction in some legal systems. The bases for recognition and enforcement under the Convention are broader than the traditional bases for international jurisdiction at common law, although not quite as broad as some of the more ‘exorbitant’ grounds of long-arm jurisdiction deployed in some systems.
Rights in rem in immovable property are afforded a special position. Consistently with the policy underlying the old ‘Mozambique rule’, judgments of courts of the State in which immovable property is situated shall be recognised and enforced if and only if the property is situated in the State of origin.
The Convention sets out grounds on which courts may refuse to recognise or enforce judgments otherwise within scope. These include that the judgment is ‘manifestly incompatible with public policy of the requested State’; a criterion familiar to the 2005 Convention on Choice of Court Agreements and the Brussels I Regulation (Recast). Refusal is justified if the foreign judgment was obtained by fraud or is inconsistent with a judgment of a court of the requested state between the same parties. Recognition or enforcement may also be refused if, and to the extent that, the judgment awards non-compensatory damages, including exemplary damages, consistently with the ‘penal rule’ of many systems of private international law.
The Convention is deliberately complementary to the Convention on Choice of Court Agreements: courts may refuse to recognise or enforce foreign judgments if the proceedings in the foreign court were contrary to a choice of court agreement or a designation in a trust instrument. Judgments based on asymmetric and non-exclusive jurisdiction clauses—which are beyond the scope of the Convention of Choice of Court Agreements—will circulate under the new Convention. The HCCH Judgments Convention is yet more evidence of the primacy of party autonomy in private international law.
There is much more detail to this Convention which is explored in detail elsewhere, including, notably, in the forthcoming Explanatory Report to the Convention. It is worth highlighting a particularly controversial issue: the prospect of ‘bilateralisation’. This factor contributed to the failure of the HCCH’s 1971 Convention, which relevantly provided that judgments of ‘a Contracting State shall not be recognised or enforced in another Contracting State … unless the two States, being Parties to this Convention, have concluded a Supplementary Agreement to this effect’. Having learned the lesson from the last generation, the 2018 Draft Convention did not contain any analogous provision; rather, was to be open for signature by all States. The final text retains that default position while adding an escape valve of sorts. A Contracting State may notify the depository that the Convention shall not have the effect of establishing relations between that State and another Contracting State. The euphemistic language is a thin cover for the private international law equivalent of saying ‘you can’t sit with us’. While some may lament this inverse bilateralisation, it may contribute to broader uptake of the instrument. If so, the price would have been worth it.
The policy tension affecting the bilateralisation issue is of the essence of the Judgments Project, and even the discipline of private international law. To what extent are States willing to limit their sovereignty, and accept different approaches of foreign legal systems to civil disputes, for the sake of a greater good? How are States to weigh their diverse public policies against comity? Hundreds of people, from every corner of the Earth, wrestled with these questions over the many years of the Judgments Project. The HCCH operates on consensus; with the finalisation of the HCCH Judgments Convention text, Member States answered these questions with a single voice. They produced an inclusive instrument through an inclusive process.
The HCCH Judgments Convention is a landmark achievement in the progressive unification of private international law. The wider circulation of civil or commercial judgments will improve the effectiveness of remedies for transnational litigation, reducing risk for cross-border trade and investment and enhancing legal certainty and predictability. It will promote the efficient use of judicial resources. It will provide litigants with a clearer pathway to obtain meaningful relief and so will enhance access to justice and strengthen the rule of law. In the words of the HCCH Secretary General, Christophe Bernasconi, the Convention ‘will be a gamechanger for cross-border dispute settlement and an apex stone for global efforts to improve real and effective access to justice’.
The achievement of those lofty sentiments depends on the Convention’s uptake. On 2 July 2019, Uruguay took the first step as the first signatory to the Convention. Hopefully, the not insignificant carve-outs from the Convention’s scope, the grounds of refusal of recognition or enforcement, and the consensus reached on various fault lines ventilated at the diplomatic session, will incentivise accession to the Convention. The perfect should not be an enemy of the good; the HCCH Judgments Convention is not perfect, but it is very good.
Michael Douglas is a Senior Lecturer at UWA Law School, University of Western Australia and a Consultant at Bennett + Co, Perth.