The 2005 Hague Convention: A Panacea for Non-Exclusive and Asymmetric Jurisdiction Agreements Too?
Vivienne Bath, Andrew Dickinson, Michael Douglas and Mary Keyes (eds), Commercial Issues in Private International Law: A Common Law Perspective (Hart Publishing 2019)
Posted: 12 Mar 2020
Date Written: June 2019
The 2005 Hague Convention on Choice-of-Court Agreements is in force in the European Union (EU), Singapore, Mexico and Montenegro. The United Kingdom will separately accede to the Convention once the transition period, following its withdrawal from the EU, ends. Australia and China have also proposed joining.
The Convention contains provisions on jurisdiction and on the recognition and enforcement of judgments. The jurisdictional provisions of the Convention only apply to exclusive choice-of-court agreements. These are defined as agreements requiring both parties to sue in one country’s courts to the exclusion of all others. The Convention’s jurisdictional provisions operate according to two principles: any court designated in an exclusive choice-of-court agreement must hear the case; any court not designated in the agreement must not.
Despite the simplicity of the Convention’s provisions, the English High Court recently suggested that the Convention’s jurisdictional provisions equally apply to asymmetric choice-of-court agreements. These provide for one party to choose where to sue, after a dispute has arisen, but require the counterparty to sue in a pre-determined country. The Court’s suggestion is somewhat surprising in light of the Convention’s provisions on recognition and enforcement. The Convention allows states, on an opt-in basis, to declare reciprocally that their courts will recognize and enforce judgments rendered by courts which had jurisdiction under a non-exclusive choice-of-court agreement. The Convention defines a non-exclusive choice-of-court agreement as one which designates the courts of one country or more (but not necessarily to the exclusion of all others). An agreement that is exclusive and governed by the jurisdictional provisions of the Convention evidently cannot, also be one which is non-exclusive and, therefore, only subject to the Convention at the recognition and enforcement stage.
Against this backdrop, the chapter makes two key contributions to the literature. First, it investigates the cogency of the claim that the Convention applies to asymmetric agreements at the jurisdictional stage. It considers five conceivable ways in which the Convention could apply and concludes that the claim is flawed. At least the most common variants of asymmetric agreements are non-exclusive under the Convention’s jurisdictional provisions. Second, the chapter considers the Convention’s optional reciprocal declaration mechanism for judgments based on non-exclusive (including asymmetric) choice-of-court agreements. It considers whether, on its accession to the Convention, Australia should opt-in. It scrutinizes the conditions that such a judgment must fulfil before it can be recognised, highlighting several drawbacks.
These contributions are significant for several reasons, the most topical of which relates to Brexit. Once the transition period ends on 31 December 2020, EU Member State courts will no longer be obliged by the relevant EU law Regulation to recognise and enforce judgments of English courts. If asymmetric agreements, as the chapter concludes, are not ‘exclusive’ agreements under the Hague Choice-of-Court Convention, absent a reciprocal declaration, EU Member State courts will not be obliged to recognise and enforce judgments of English courts under that Convention either. Given the ubiquity of asymmetric agreements in London’s financial markets, the consequences of that conclusion are far-reaching. It may provoke lobbying on the part of Westminster for Brussels to opt-in to the reciprocal declaration, so that EU Member States will be required to enforce judgments of English courts whose jurisdiction was based on an asymmetric agreement. Or it may prompt a re-evaluation of the continued utility of asymmetric agreements in practice in England and beyond.
Suggested Citation: Suggested Citation