The Hague Runs into B2B: Why Restructuring the Hague Convention of Foreign Judgments in Civil and Commercial Matters to Deal with B2B Contracts Is Long Overdue

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I. INTRODUCTION

In October of 1999, The Hague Conference on Private International Law issued a Preliminary Draft Convention on Jurisdiction and Foreign Judgments in Civil and Commercial Matters (Hague Convention). (1) There were sixty-four member States to the Hague Conference on Private International Law in January 2004. (2) In order to maintain effective international business to business (B2B) (3) contracts, the Hague Convention must revise some of its original language. (4)

Part I of the note analyzes electronic commerce, specifically B2B contracts. Next, Part II briefly describes the foundation and history of the Hague Convention, as well as two specific articles. In Part III, alternative approaches to jurisdiction and enforcement of judgments are outlined; including an overview of the informal working group's proposals to accomplish the goal of the Special Commission. (5) The Special Commission is concerned with whether the Hague Convention meet the needs of e-commerce. (6) Finally in Part IV, proposals are tested by adopting certain aspects of the alternative approaches in Part III, better aligning the Hague Convention with current B2B law.

II. ELECTRONIC COMMERCE

By the year 2007, the number of Internet users is projected to be approximately 1.46 billion. (7) Congress has defined e-commerce as "any transaction conducted over the Internet or through Internet access, comprising the sale, lease, offer, or delivery of property, goods, services, or information, whether or not for consideration, and includes the provision of Internet access." (8) These transactions are creating a great deal of revenue, with some estimating Internet commerce growth to be 1.3 trillion by the end of 2003. (9) The above numbers evidence the growing trend toward the online marketplace using B2B contracts, but if the Hague Convention is not updated, these trends might decrease. (10)

This note specifically deals with B2B contracts. (11) Many nonnegotiated, mass-market contracts are enforceable as B2B contracts, under the current Hague Convention. (12) In addition, click-wrap agreements are also enforceable. (13) Businesses are able to choose which jurisdiction their contracts will be enforced by using clip-wrap agreements. (14) In a recent survey of international businesses, the majority of the businesses specified certain courts to obtain exclusive jurisdiction over their businesses. (15)

There are some courts which do not enforce click-wrap agreements. (16) Being relatively young, these types of "contracts" will surely change the way many conduct business over the next several years. Recently, a broad based electronic commerce organization has urged Mr. Jeffrey Kovar, Assistant Legal Advisor for Private International Law, United States Department of State, to revamp the current language of the Hague Convention because click-wrap agreements have an adverse impact on current electronic commerce. (17) Cases of this sort will be distinguished under the Hague Convention because the treaty honors forum selection clauses. If adopted by Congress, courts of the United States, and the several States would be required to enforce the Hague Convention. (18) Perhaps the threat of a constitutional crisis may permit some courts to disregard an adopted Hague Convention. (19)

There is another type of business contract conducted over the Internet, used mainly for personal transactions, called business to consumer (B2C) contract. (20) The most recognizable B2C contracts are transacted through ebay. Contracts which fall under this category are potentially within the Hague Convention, but there has been considerable dispute over the language of Article7-dealing with B2C contracts. (21) The online marketplace is now a global forum for businesses and persons to conduct business. In the interest of modernizing the law, the Hague Convention is proposing to adopt a uniform set of rules dealing with business, but that does not necessarily mean e-commerce or B2B. …