Md. Mamonor Rashid
Choice of Court Agreement and International Arbitration are being the recent debate that they are canned as contender of each other. Choice of Court Agreement (CCA)are the repercussion of the Hague Convention and international arbitration is the upshotsof the New York Convention on the Recognition and Enforcement of Arbitral Awards (‘New York Convention’). However, the Hague Convention on Choice of Court Agreements is considered as “a sort of mini version of the New York Convention for the enforcement of court judgments”.
The HagueConvention is an international treaty that legally binds contracting parties to a uniform set of rules relating to civil and commercial matters. It currently has 33 Contracting Parties, mostly EU member states (excluding Denmark). However, Bangladesh is not a party to the Hague Convention.
Hague Convention
The Hague Convention was concluded in 2005, and came into force on 1 October 2015 and was designed to promote international trade and investment by encouraging judicial co-operation in multi-jurisdictional litigation, and the enforcement of foreign judgments.
It applies to cases that are international in nature (Article 1) but also outlines several matters that do not fall within its scope of application. They include disputes about employment, consumer contracts, family law, insolvency and the validity of intellectual property rights other than copyright and related rights (Article 2).
There are three key features of the Hague Convention:
i)Where parties have stipulated an exclusive choice of court agreement in their contracts, the Hague Convention requires that a court selected by parties must act in every case as long as the choice of court agreement is not null and void (Article 5). There is no discretion (on forum non conveniens or other grounds) in favor of courts of another State.
ii)The Hague Convention provides that any other court seized but not chosen must dismiss the case unless the exceptions listed in the Hague Convention apply (Article 6). A jurisdiction agreement is thus effectively enforced and avoids parallel proceedings.
iii)Key feature of the Hague Convention is that it provides an international framework to recognize and enforce judgments. A judgment rendered by the court of a member State must be recognized and enforced by the courts of other member States (Article 8) unless one of the exceptions established by the Hague Convention applies (Article 9). This is the feature highlighted by Michael Hwang SC and Menon CJ in their speeches.It must be borne in mind that the recognition and enforcement of judgments between member States are limited to judgments made by courts designated by the parties under the choice of court agreement.
Recognition and enforcement of foreign judgments
The third goal of the Convention is the recognition and enforcement of foreign judgments. Article 8 states that: “a judgment given by a court of a Contracting State designated in an ECCA shall be recognised and enforced in other Contracting States in accordance with this Chapter. Recognition or enforcement may be refused only on the grounds specified in this Convention”. Article 9 lists seven grounds for refusal.
Three important points are:
Public Policy
Article 9(e) states that: “recognition or enforcement would be manifestly incompatible with the public policy of the requested State, including situations where the specific proceedings leading to the judgment were incompatible with fundamental principles of procedural fairness of that State”.
Public policy encapsulates violations of procedural fairness that also violate public policy. The Convention cannot determine the meanings of terms such as public policy, reservation of public order or public interest of society.
There is no international or uniform definition of “public policy” and the concept changes over time. This makes it impossible to predict how the courts will interpret the term in practice or its effect on parties to the Convention.
Mismatched Judgments
Article 9(f) states that: “the judgment is inconsistent with a judgment given in the requested State in a dispute between the same parties”. This appears to contradict the ECCA requirement to recognize and enforce judgments. The Explanatory Report states that an “inconsistent judgment” must have identical parties but is not required to have identical causes of action. It includes default judgments. This contradicts the concept of an “exclusive judgment” because a court can refuse to recognize and enforce a foreign judgment under Article 9(f). The Convention prioritizes judgments from courts in requested countries, in breach of the “court first seized rule”.
Limiting declarations
An issue related to the actual connection principle is whether a court in the requested country, as a “disinterested court”, is obligated to recognize and enforce foreign judgments. Article 20 states that: “A State may declare that its courts may refuse to recognize or enforce a judgment given by a court of another Contracting State if the parties were resident in the requested State, and the relationship of the parties and all other elements relevant to the dispute, other than the location of the chosen court, were connected only with the requested State”. This applies to the same subjects as Article 1. Article 20 cases are not “international cases” so may fall outside of the Convention’s jurisdiction. If a “disinterested court” establishes jurisdiction but disregards the Convention, the requested countries’ can refuse to recognize and enforce the judgment in domestic cases. This protects the requested countries’ judicial sovereignty over actual connection and domestic cases.
Conclusion
The Convention is almost identical to the New York Convention in regards to the recognition and enforcement of arbitrary awards. International commercial arbitration’s predominant advantage in international dispute settlement may be compromised. It is the multilateral convention on jurisdiction and enforcement to which Bangladesh is a not party.
About the Author
The Author has attained his Master of Laws by thesis (Equivalent to M.Phil) on International Commercial Arbitration from University Utara Malaysia with Post Graduate Scholarship. He is practicing as an Associate of CM&A LCP, focusing on International Commercial Arbitration, Corporate Law and Drafting. He is the Young Professional member of Singapore International Arbitration Centre (SIAC), Singapore and Young International Arbitration Group, LCIA, London. Can be reached at [email protected]
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