Implementing the Hague Convention on Choice of Court Agreements in the United States: an opportunity to clarify recognition and enforcement practice.

• Author: Edsall, Caroline

INTRODUCTION

On January 19, 2009, the United States signed the Hague Convention on Choice of Court Agreements (Convention or HCCCA), (1) designed to govern disputes between parties arising out of contracts with forum selection clauses. (2) The Convention asserts "three basic rules" (3): courts of Contracting States must (1) assume jurisdiction if named in a choice-of-court agreement, (4) (2) decline jurisdiction if not named in a choice-of-court agreement, (5) and (3) recognize and enforce (6) any judgment issued in accordance with a choice-of-court agreement by a court of a Contracting State. (7)

The Convention also lists seven exclusive grounds upon which the court of a Contracting State may decline to recognize or enforce a foreign judgment under the Convention. (8) However, recognition and enforcement practice in U.S. courts under the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) (9) and the Uniform Foreign Money-Judgments Recognition Act (UFMJRA) (10) suggests that American courts may invoke an additional ground for refusal: the recognizing and enforcing court's lack of jurisdiction over the parties. (11)

This Comment argues that the jurisdictional requirements of the recognizing and enforcing court are in need of elaboration and clarification as the United States prepares to implement the new Hague Convention. (12) Part I provides an overview of recognition and enforcement practice under both the New York Convention and the UFMJRA and highlights existing inconsistencies. Part II then presents a proposal for the future under the HCCCA: in cases of enforcement, U.S. courts should not require jurisdiction over the defendant's person as long as they have jurisdiction over the defendant's property, and there should be no need to establish a connection between the property and the case. Furthermore, in cases of recognition only, courts should not require jurisdiction over either the person or his property, with the result that the plaintiff should be permitted to obtain recognition even in the absence of assets in the forum. In order to unify and clarify U.S. practice for future litigants, language elaborating upon these jurisdictional requirements (or lack thereof) should be added to the Convention's implementing legislation. (13)

1. THE CURRENT APPROACH TO JURISDICTIONAL REOUIREMENTS IN THE RECOGNITION AND ENFORCEMENT OF ARBITRAL AWARDS UNDER THE NEW YORK CONVENTION AND FOREIGN JUDGMENTS UNDER THE UFMJRA

   The jurisdictional requirements for enforcing arbitral awards are inconsistent between circuits. Courts generally require personal or quasi in rem jurisdiction over the defendant; (14) however, for quasi in rem purposes, the Fourth and Ninth Circuits currently disagree as to whether the property must bear a connection to the dispute before it can serve as a basis for jurisdiction in enforcement actions. In Base Metal Trading, Ltd. v. OJSC "Novokuznetsky Aluminum Factory," the Fourth Circuit refused to assert jurisdiction based on the presence of property in the forum because there was no connection between that property and the parties' dispute. (15) Meanwhile, in Glencore Grain Rotterdam B. V. v. Shivnath Rai Harnarain Co., the Ninth Circuit suggested that it would be willing to exercise its jurisdiction over the defendant's property even when "that property ha[d] no relationship to the underlying controversy between the parties." (16)

   In the foreign judgments context, the case law on jurisdictional requirements for enforcement seems more clearly not to require a connection between the property in dispute and the underlying cause of action. (17) As an example, the Michigan Court of Appeals in Electrolines, Inc. v. Prudential Assurance Co. recently adopted the position that "'an action to enforce a judgment may usually be brought wherever property of the defendant is found, without any necessary connection between the underlying action and the property, or between the defendant and the forum."' (18) There is no guarantee, however, that confusion similar to that existing in the arbitral context will not arise in the foreign judgment context. Moreover, some cases discussing the enforcement of foreign judgments have reasoned imprecisely and hinted at a potentially more expansive approach. (19)

   The jurisdictional requirements for recognition alone are largely unknown, but courts and commentators who have discussed the issue disagree. On the arbitral side, parties rarely seek recognition by itself, with the result that the independent requirements of recognition remain unspecified. (20) In the foreign judgment context, some approaches require evidence of property in the forum at the recognition stage, while others do not. For instance, the American Law Institute's proposed federal statute would require personal jurisdiction over the debtor or property of the debtor in the forum before recognizing a foreign judgment. (21) On the other hand, several state courts have dispensed with the property requirement. In Lenchyshyn v. Pelko Electric, Inc., a New York court reasoned that "even if defendants do not presently have assets in [the forum], plaintiffs nevertheless should be granted recognition of the foreign country money judgment ... and thereby should have the opportunity to pursue all such enforcement steps in futuro." (22) Following Lenchyshyn, a Texas intermediate appellate court agreed in Haaksman v. Diamond Offshore (Bermuda), Ltd. that "if a judgment debtor does not currently have property in [the forum], a judgment creditor should be allowed the opportunity to obtain recognition of his foreign-money judgment and later pursue enforcement if or when the judgment debtor appears to be maintaining assets in [the forum]." (23)

2. PROPOSED FUTURE APPROACH TO JURISDICTIONAL REOUIREMENTS IN THE RECOGNITION AND ENFORCEMENT OF FOREIGN JUDGMENTS...