THE HAGUE CONVENTION ON CHOICE OF COURT AGREEMENTS: A CRITICAL ASSESSMENT.

• Author: Born, Gary

INTRODUCTION 2080 I. THE CHOICE OF COURT CONVENTION: ORIGINS AND NEGOTIATIONS 2081 II. THE CHOICE OF COURT CONVENTION: STRUCTURE AND PROVISIONS 2086 A. Scope of Convention 2087 1. International Cases 2087 2. Exclusive Choice-of-Court Agreements 2089 3. Civil or Commercial Matters 2091 4. Exclusions from Scope of Convention 2091 B. Jurisdictional Rules under Convention 2093 1. Exclusive and Mandatory Jurisdiction of Chosen Court 2094 2. No Jurisdiction of Courts Not Chosen 2096 C. Recognition and Enforcement Rules 2097 D. Other Matters 2100 III. THE CHOICE OF COURT CONVENTION: AN ASSESSMENT 2101 A. The New York Convention: A Suitable Paradigm? 2103 INTRODUCTION

The Hague Convention on Choice of Courts Agreements ("Convention" or "Choice of Court Convention") aspires to be one of the most significant private international law treaties of this century. The Convention would substantially alter existing rules in many jurisdictions, including the United States, governing the recognition and enforcement of both international choice-of-court agreements and judgments obtained in proceedings based on such agreements. The Convention's drafters and other proponents promote it as replicating both the terms and success of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards ("New York Convention"), transposed to cross-border forum selection agreements.

Despite these aspirations, little critical assessment of the Convention's terms or effects has been undertaken. Both scholarly commentary and official explanatory reports are almost entirely descriptive or promotional. There have been virtually no serious efforts to evaluate the costs and benefits of the Convention or the wisdom of its fundamental structure and terms.

Despite its obvious good intentions, there are substantial grounds for doubting the wisdom of the Convention, both for the United States and other jurisdictions. The Convention transplants basic principles from the New York Convention to the context of cross-border choice-of-court agreements, notwithstanding substantial differences between the arbitral process and proceedings in (many) national courts. These differences raise serious doubts as to the benefits of the Choice of Court Convention's basic terms and objective; in particular, there are very substantial grounds for questioning whether it is wise, in the context of a global convention, to treat choice-of-courts agreements and national court judgments in the same manner as international commercial arbitration agreements and arbitral awards. The Choice of Court Convention also omits significant safeguards that the New York Convention and most national legal systems incorporate, which ensure that both the parties' autonomy and the procedural integrity of the adjudicative process are respected. In doing so, the structure and terms of the Choice of Court Convention again raises serious doubts as to both the benefits it would produce and the fairness of proceedings under the Convention.

This Article seeks to provide an objective assessment of the Choice of Court Convention's structure and terms, evaluating the costs and benefits to the United States and other jurisdictions' ratification of the Convention. Part I of the Article summarizes the negotiating history of the Convention and the aspirations of its proponents. Part II of the Article outlines the Convention's basic terms, including comparisons with the principal provisions of the New York Convention. Part III of the Article evaluates the Choice of Court Convention, focusing in particular on its provisions dealing with the parties' autonomy and the procedural integrity of the adjudicative process. The Article concludes that, in both respects, the Convention fails to provide counterparts to the safeguards of the New York Convention and existing U.S. law and it appears likely to expose parties to significant risks of unfairness and ought not be ratified by nations committed to the rule of law.

1. THE CHOICE OF COURT CONVENTION: ORIGINS AND NEGOTIATIONS

   The Choice of Court Convention was drafted under the auspices of the Hague Conference on Private International Law ("Hague Conference"). (1) The Hague Conference is an influential inter-governmental organization, conceived and largely dominated by Continental European academics and government representatives. (2) Over the past 70 years, the Conference has produced texts of some 40 private international law instruments, addressing various aspects of the recognition of judgments, (3) choice of law, (4) jurisdiction (5) and related topics. (6)

   Among other things, in 1954, the Hague Conference proposed a convention on international civil procedure, (7) in 1965, a convention on choice of court agreements (8) and, in 1971, a convention (and addendum) on the recognition and enforcement of foreign judgments. (9) As with a number of other proposals by the Conference, (10) these various conventions attracted only minimal state support and none of them came into effect. (11) In contrast, several of the treaties negotiated under the Hague Conference's auspices with other subject matters have proven relatively successful. (12)

   Notwithstanding this history, (13) the Hague Conference elected to revisit the topic of a multilateral recognition of judgments and jurisdiction convention in 1996 (after four years of discussions and study). (14) Thereafter, the Conference devoted nearly a decade to discussion of a jurisdiction and judgments convention, which took what was described as a "mixed Convention approach." (15) The Conference's proposed mixed treaty would have relatively comprehensively regulated both permissible and prohibited grounds of jurisdiction and the recognition and enforcement of judgments. (16) After (another) five years of discussions, a draft convention was narrowly approved by the Hague Conference (with European states constituting the majority, while a number of non-European states voted against the draft). (17)

   The lack of broad-based support for the Conference's proposed draft jurisdiction and judgments convention led to a decision in June 2001 to suspend work on a mixed convention. (18) Instead, in April 2002, the Hague Conference "modified the entire project" (19) by directing the formation of an informal Working Group charged with drafting an entirely new convention limited only to areas of apparent agreement on jurisdictional rules between state representatives. (20) The Group's efforts were focussed on proceedings involving jurisdiction based on choice of court agreements in business-to-business cases, submission, the defendant's forum, and counterclaims. (21)

   The Working Group produced a draft in less than a year (in April 2003), (22) which was then submitted to a Special Commission that, in another year, produced a materially revised text (in April 2004). (23) The draft was presented in June 2005 to the Hague Conference's Diplomatic Conference, which then produced the Convention's final text. With the signing of the Final Act, on June 30, 2005, the Convention was "open[ed] for signature and ratification." (24)

   The first state to accede to the Choice of Court Convention was Mexico (in 2007), followed by the European Union (in 2015). (25) The Convention has also been ratified by Singapore (in 2016), (26) Montenegro (in 2018) and the United Kingdom (in 2020). (27) The Convention first entered into force on October 1, 2015, and is now in force for the European Union and its 27 Member States (including Denmark, which acceded separately), Montenegro, the United Kingdom and Singapore. (28) The Convention has also been signed, but not ratified, by several states, including the United States (in 2009), Ukraine (in 2016) and China (in 2017). (29)

   The Hague Conference has high aspirations for the Convention, which has been vigorously promoted by both the Conference's Permanent Bureau and the European Union. The New York Convention, with nearly 170 Contracting States, has been repeatedly identified as both the Choice of Court Convention's model and ultimate measure of success. In the words of the Hague Conference's Explanatory Report, "[t]he hope is that the Convention will do for choice of court agreements what the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 10 June 1958 has done for arbitration agreements." (30) Or, as the First Secretary of the Permanent Bureau later put it, with even higher aspirations:

   It is hoped that the new Convention will do for choice-of-court agreements what the highly successful 1958 New York Convention does for arbitration agreements, namely to protect party autonomy and to provide predictability and legal certainty to business parties who want to make arrangements for the resolution of disputes that have arisen or may arise between them. (31) In these and other commentary, there has been no hesitation about recommending the Convention or promoting its ratification by states on a worldwide basis. On the contrary, the Convention's proponents variously describe it as "filling the governance gap that, in the absence of a uniform global legal regime, currently exists concerning the effect of choice of court agreements;" (32) marking "a major milestone of international civil procedure;" (33) enhancing the "movement of people, goods, capital, services, and ideas" [by ensuring] the "free movement of judgments;" (34) and providing "an opportunity for creating a worldwide judicial alternative for business-to-business dispute resolutions." (35) Like the New York Convention, the Choice of Court Convention has been consistently promoted as a global instrument, suitable for ratification by all states, which will ensure respect for party autonomy (by giving effect to forum selection agreements) and efficiency (by permitting relatively easy recognition and enforcement of foreign judgments).

2. THE CHOICE OF COURT CONVENTION: STRUCTURE AND PROVISIONS

   The...