31 October 2019

The Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters: A Game-Changer?

Written by Juliana Jorissen, Minoshi De Silva and Allison Warrier.

The Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (Convention) has been described as a “game-changer” in international disputes.[1] As the name suggests, the Convention seeks to obtain international recognition and enforcement of judgments. Currently, only Uruguay has signed up to the Convention. However, if widely ratified, the Convention will significantly improve cross-border dispute settlement by promoting efficiency and certainty for parties in international disputes. By facilitating international recognition and enforcement of judgments, this Convention may challenge the status of arbitration as the dispute resolution process of choice for international disputes.

The Application of the Convention

The Convention, adopted on 2 July 2019 by the Hague Conference on Private International Law, aims to promote efficiency by facilitating a uniform set of core rules for the recognition and enforcement of international judgments. The Convention imposes an obligation on Contracting States to ensure judgments given by a court of a Contracting State is recognised and enforced in another Contracting State.[2]

The Convention broadly applies to commercial and civil matters, and to both a decision on the merits as well as the determination of costs.[3] Importantly, there are distinct areas of civil and commercial law which are excluded from the scope of the Convention, such as insolvency[4], defamation[5] and intellectual property[6]. Additionally, the Convention does not apply to arbitrations and arbitration related proceedings.[7] Notably, a party can sever part of a judgment where only part of the judgment is capable of being recognised or enforced under the Convention.[8]

There are broad circumstances under which judgments are eligible for recognition and enforcement under the Convention.[9] For example, a judgment concerning a contractual obligation is recognisable and enforceable when the judgment is made by a court in the state the contractual obligation was performed pursuant to the contract.[10] It is foreseeable that this situation will apply to many parties in cross-border commercial relationships. The international recognition of judgments relating to cross-border contractual obligations will significantly improve the ease with which parties can enforce their judicially determined rights.

The Convention outlines a relatively simple procedure to apply to have a foreign judgment recognised and enforced. The party seeking the enforcement has to provide a complete and certified copy of the judgment. [11] The remainder of the enforcement procedure is left to the law of the state in which judgment is to be enforced.[12]

Recognition and enforcement of an eligible judgment may only be refused on the grounds specified in the Convention[13]: including if the defendant was not properly notified[14] or in the judgment was attained through fraud.[15] The reasons for refusal of enforcement listed in the Convention appear narrow.

Importantly, the Convention confers discretion to a State to choose not to apply the Convention, for example if the State has a “strong interest” in not applying the Convention.[16] A “strong interest” is not defined in the Convention and will likely be left to individual States to decide. This broad discretion is consistent with upholding state sovereignty which is often protected in international treaty documents.

Is the Convention a “game-changer”?

The broad application of the Convention is in line with the general aims of the Convention to promote efficiency and effectiveness of international recognition. If the Convention is widely ratified and applied the Convention will result in judgments gaining international recognition. This will likely lead to a reduction in costs in litigation disputes and may increase the certainty and efficiency of international disputes as parties will more readily be able to enforce judgments in foreign jurisdictions.

The success of the Convention is ultimately dependent on its wide ratification and application. As at 31 October 2019, the Convention is not yet in force, has no contracting parties and only has one signatory, Uruguay.[17] If this Convention is widely applied it may certainly be a “game-changer” as it may affect the popularity of arbitration as the preferred form of dispute resolution where enforcement of a judgment is required in foreign jurisdictions. However, there is a long way to go to see if this is realised.


[1] Hague Convention on Private International Law, Gamechanger for cross-border litigation in civil and commercial matters to be finalised in the Hague (18/06/2019), available at < https://www.hcch.net/en/news-archive/details/?varevent=683>

[2] Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (02/07/2019) (Convention), Article 4(1)

[3] Convention, Article 3(1)(b)

[4] Convention, Article 2(1)(e)

[5] Convention, Article 2(1)(k)

[6] Convention, Article 2(1)(m)

[7] Convention, Article 2(2)

[8] Convention, Article 9

[9] Convention, Article 5

[10] Convention, Article 5(1)(g)

[11] Convention, Article 12(1)(a)

[12] Convention, Article 13(1)

[13] Convention, Article 4(1)

[14] Convention, Article 7(1)(a)(ii)

[15] Convention, Article 7(1)(b)

[16] Convention, Article 18(1)

[17] Hague Conference website, Status Table, available at <https://www.hcch.net/en/instruments/conventions/status-table/?cid=137>

 

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