Private International Law - Civil Procedure - Hague Conference Approves Uniform Rules of Enforcement for International Forum Selection Clauses

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PRIVATE INTERNATIONAL LAW--CIVIL PROCEDURE--HAGUE CONFERENCE APPROVES UNIFORM RULES OF ENFORCEMENT FOR INTERNATIONAL FORUM SELECTION CLAUSES.--Convention on Choice of Court Agreements, concluded June 30, 2005.

Trade is greatly facilitated when international parties can make contracts safe in the knowledge that their disputes will be recognized and resolved in the forum of their choice. Yet legal systems may fail to protect these reasonable expectations. Recently, the member states of the Hague Conference on Private International Law approved the Convention on Choice of Court Agreements, (1) which lays out uniform rules for the enforcement of international choice of court clauses. The Convention not only requires that courts in member states assume jurisdiction pursuant to certain forum selection agreements between businesses around the world, but also lays out rules for the recognition of judgments thereby entered. These provisions will--if signed and ratified by the United States--render immaterial difficult Erie (2) questions regarding which law federal courts should apply to such agreements. Moreover, the Convention may also serve as a catalyst for standardized treatment of domestic forum selection clauses among the states and may later promote a much-needed legislative standardization of domestic jurisdictional law. (3)

In 1992, the United States spearheaded a project with the Hague Conference on Private International Law (4) to draft a worldwide convention on the recognition and enforcement of judgments in international civil law. (5) Increasing reliance on cross-border trade had exposed limitations in the legal framework for dealing with international civil litigation; as one State Department official put it, a worldwide judgments convention would help "lay the legal structure necessary to support the growth of global markets, promote sensible international legal cooperation, and provide for the general well-being of all our societies." (6) Although a United Nations convention (7) has successfully regulated enforcement of arbitral contracts and agreements since 1958, the United States, unlike many European countries, (8) is not yet a party to any treaty regarding the enforcement of judgments. (9)

The first draft of the Hague Convention was more comprehensive, (10) but it ultimately proved too controversial; (11) after years of delays, the United States appeared ready to abandon the project. (12) In order to salvage the negotiations, the Permanent Bureau of the Hague Conference, together with an informal working group, proposed that the Convention be scaled down to address only choice of court agreements between businesses, leaving many of the broader jurisdictional and enforcement provisions on the cutting room floor. (13) On this advice, the Hague Conference resurrected a leaner version of the original draft, and in June 2005, all of the member states approved it as the Hague Convention on Choice of Court Agreements. (14)

With the stated objective of "promot[ing] international trade and investment through enhanced judicial co-operation," (15) the Convention applies solely to "international cases [of] exclusive choice of court agreements concluded in civil or commercial matters." (16) Significantly, it pertains only to business-to-business transactions; consumer contracts and contracts of employment are specifically excluded. (17)

Three basic rules--fettered with many restrictions--form the foundation of the Convention. First, a court designated in an exclusive choice of court agreement "shall not decline to exercise jurisdiction on the ground that the dispute should be decided in a court of another State." (18) Second, the inverse also applies: any court not designated in the exclusive forum selection agreement must refuse jurisdiction. (19) Third, state parties must enforce judgments resulting from an exclusive choice of court agreement. (20) A fourth, optional provision allows states to declare that they will recognize and enforce judgments rendered by courts of other contracting states designated in nonexclusive choice of court agreements. …