Impact of the EU acceding to The 2019 Hague Judgments Convention

The 2019 Hague Judgments Convention[1] (‘the Judgments Convention'), provides a reciprocal framework for the recognition and enforcement of national court judgments in civil or commercial matters. Following the recent decision of the EU to join the Judgments Convention, we consider in this article how a number of different jurisdictions, including France, Germany, Spain, the Netherlands, Australia and the UK view the Judgments Convention and the impact it may have on the recognition and enforcement of judgments from the courts of other countries in those jurisdictions.

It has been recognised by the international legal community that there is increasing frustration by businesses who operate cross-border at the time, cost, and complexity of enforcing national court judgments across borders. This means their transactions are faced with added risks and a lack of predictability regarding whether they can have a court judgment from one jurisdiction recognised and enforced in another where their counter party may have assets. This contrasts with the position in international arbitration where there is one overarching legal instrument (the 1958 New York Convention[2]) that provides a single framework for recognition and enforcement of arbitral awards in most of the countries of the world. While the application of the New York Convention is not without its own challenges, it at least provides a basis for the uniform recognition and enforcement of arbitral awards in a way that is absent with the use of court judgments. The Judgments Convention is intended to remedy this.

The aim of the Judgments Convention is to provide legal certainty and predictability for parties involved in cross-border transactions when the courts in those jurisdictions who are party to the Judgments Convention are asked to recognise and enforce court judgments from other countries who are also parties.

Readers may already be familiar with the 2005 Hague Choice of Court Convention[3] which provides a mechanism by which parties, from signature states, can choose which court or jurisdiction they wish to hear their dispute and the courts of those states must recognise that choice. These types of agreements are known as exclusive choice of court agreements or ‘forum selection’ or ‘jurisdiction’ clauses. The Judgments Convention is wider in scope because it is not restricted only to the enforcement of judgments which stem from an exclusive choice of court of agreement. However, it is not designed to override existing treaties and gives respect to bilateral and regional treaties already in place[4]. In addition, parties to the Judgments Convention can make declarations that they do not wish to recognise judgments from particular states[5]. Yet, the Judgments Convention is also narrower in scope because it only deals with enforcement of judgments, whereas the 2005 Hague Choice of Court Convention also looks at the question of jurisdiction, albeit in respect of exclusive jurisdiction clauses only, as discussed above.

Contracting Parties to the Judgments Convention

In order to become a contracting party to The Judgments Convention, a state needs to firstly sign and then ratify or accede to it. Following ratification, the Judgments Convention will only come into force 12 months later. For the Judgments Convention to enter into force, it needs a minimum of two states to ratify it. Significantly, on 12th July 2022 The Economic and Financial Affairs Council of the EU formally adopted the EU Council Decision concerning the accession of the EU (apart from Denmark) to the Convention[6]. On 29 August 2022 the EU deposited its instrument of accession, and the Ukraine deposited its instrument of ratification. The Judgments Convention will enter into force between the Ukraine and the EU (but not Denmark) only on 1 September 2023.

Contracting Party Date of Signature Date of Ratification / Accession Derogations
Uruguay 2.7.19
Ukraine 4.3.20 29.8.22. In force with EU from 1.9.23
Israel 3.3.21
Costa Rica 16.9.21 Yes[7]
Russian Federation 17.9.21
USA 2.3.22
EU[8] 12.7.22 29.8.22. In force with Ukraine from 1.9.23

 

However, the question remains, how many other jurisdictions will join, and will it be effective on the ground once it comes into force? We have asked our International Dispute Resolution colleagues what they think the impact of the Judgments Convention will be in their jurisdictions.

France

The entry into force of the Judgments Convention will have limited impact on the recognition of foreign judgments in France not only because the Convention provides that national law, where more favourable than the rules contained in the Convention, may be applied, but also because the rules enshrined in the Convention are similar to those found in French international private law.

In accordance with Article 15 of the Judgments Convention (subject to the exception in relation to property matters set out in Article 6), Contracting States are still allowed to recognize or enforce judgments in application of their more favourable national law. Therefore, since French law merely requires that the judgment for which recognition is sought was issued by a court with a clear connection with the dispute, the effect of Article 15 will result in the application of French law to issues of recognition and enforcement of judgments.

Nevertheless, even if French courts decide to apply the rules of the Judgments Convention instead of French international private law, the outcome will be the same since both enshrine the same rules. Indeed, Article 7 of the Judgments Convention and French international private law both impose flexible conditions for the effectiveness of foreign judgments, i.e., compliance with public policy, including the fundamental principles of procedural fairness, the absence of fraud, and the absence of irreconcilability between judgments. Therefore, according to both the Judgments Convention and French law, the judge overseeing the enforcement proceedings must verify that the court that rendered the judgment has a sufficiently clear connection with the dispute such that the court’s jurisdiction to decide the dispute appears legitimate. Moreover, Article 4.2 of the Judgments Convention, as is the case under French law, prohibits any review of the merits of the judgment (or the law applied) by the enforcement judge.

Germany

For Germany, the Convention becomes binding as European law in relation to other contracting states twelve months after the deposit of the instrument of approval by a representative of the European Union in The Hague. As European law, some implementing provisions are needed in German domestic law, in particular under section 722 of the CCP (the German Code of Civil Procedure), as, running in tandem with European law and international treaty provisions, foreign judgments can also be declared enforceable by an enforcement judgment pursuant to the latter provisions.

Overall, the uniform regulation for the recognition and enforcement of foreign decisions follows the principles of the German sustainability strategy. Not only do the Judgments Convention and domestic law contribute to the realisation of sustainable development goal 10 “Reduce inequality within and between countries”, but as well as the sub-goals 16.3 “Promote the rule of law at national and international level and ensure equal access to justice for all” and 16.6 “Build effective, accountable and transparent institutions at all levels”. These two goals are part of a total of seventeen United Nations objectives adopted at the Rio+20 Conference in 2012 and entitled “Sustainable Development Goals”.[9]

Businesses’ transactions are not faced anymore with added risks and a lack of…

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