International jurisdiction agreements and the recognition and enforcement of judgments in Australian litigation: is there a need for the Hague Convention on Choice of Court Agreements?

AuthorAmin, Rosehana

ABSTRACT

One of the difficulties faced by judges and practitioners when dealing with disputes arising from international commercial transactions is in the application and enforcement of a choice of court or foreign jurisdiction clause to determine the relevant court to adjudicate the dispute. This article explores the process undertaken by Australian courts when deciding whether they should exercise jurisdiction. In addition, the legal uncertainty arising from the distinction drawn between exclusive and non-exclusive jurisdiction clauses, and the ambiguous approach employed in the enforcement of a jurisdiction clause is considered. The Hague Conference on Private International Law has developed the Hague Convention on Choice of Courts Agreement 2005 and it is intended to promote the enforceability of exclusive choice of court agreements and establish the international recognition and enforcement of resulting judgments. This article considers whether Australia should, like its American and European counterparts, take steps to sign and ratify the Hague Convention. Further, the article also assesses the impact the Convention will have in resolving jurisdictional issues faced by Australian courts and the recognition and enforcement of a resulting decision. Finally, the article posits that the Hague Convention will clarify the uncertainties facing Australian courts in international jurisdictional disputes.

Introduction

In early 2009, two of the world's major economies signed the Hague Convention on Chow of Court Agreements ('Hague Convention'). The United States (19 January 2009) and the European Community (l April 2009) signed the Hague Convention, while other States like Argentina, Canada and Singapore continue to actively consider ratification (or accession to) the Hague Convention. After accession by Mexico on 26 September 1997, the Convention awaits a second ratification or accession before it: will come into force. (1)

The Hague Convention was designed to reduce the time and expense courts and businesses face when dealing with international jurisdictional issues, and the recognition and enforcement of foreign court decisions. Thus, litigants are assured that any disputes adjudicated between them will be resolved in their chosen forum.

The use of choice of court or foreign jurisdiction clauses in Australia however is not always upheld due to the distinction drawn between exclusive and non-exclusive jurisdiction clauses. Further, the approach employed in ascertaining whether jurisdiction clauses will be enforced is not always clear. The uncertainty that results from both these issues raises the question of whether Australia should, like its American and European counterparts, take steps to sign and ratify the Hague Convention. If Australia were to ratify the Hague Convention, resulting judgments will also benefit in the same way that international arbitration agreements and awards have benefited under the highly successful New York Convention, (2) through the recognition and enforcement provisions.

Before any of these issues can be explored further, it is necessary to first, by way of background, trace the development of the Hague Convention (discussed in Part 1 of this article). Part 2 will then explore and assess the Australian approach when resolving jurisdictional issues involving choice of court agreements before turning to the question of whether Australia should adopt the Hague Convention (discussed in Part 3). A discussion on the impact of the recognition and enforcement of foreign judgments in Australia upon concluding the Convention will be reviewed in Part 4. This is followed by concluding remarks in Part 5.

  1. The Hague Convention as a Binding Legal Instrument

    The Hague Convention was negotiated and concluded in the framework of the Hague Conference on Private International Law ('Hague Conference'). (3) The Convention seeks to reinforce exclusive choice of court agreements and additionally, to ensure mutual recognition and enforcement of judgments between Contracting States.

    1. History of Negotiations

      The Hague Convention evolved from the earlier Hague Convention of 1 February 1971 on the Recognition and Enforcement of Foreign judgments in Civil and Commercial Matters ('1971 Hague Convention') which unfortunately never came to fruition due to the lack of ratifications. (4) Subsequently, the Hague Conference received a letter from the United States on 5 May 1992 which proposed a future convention in the field of recognition of and enforcement of judicial decisions ('Judgements Project'). (5) The matter was considered by the Special Commission on General Affairs and Policy in June 1992 and in its Recommendations and Decisions it was decided that a Working Group would convene before the Seventeenth Session (10-29 May 1993) to study the United States' proposal on the recognition and enforcement of judgments. (6) The Working Group met between 29 and 31 October 1992 and it unanimously agreed on the desirability of attempting to negotiate, through the Hague Conference, a new general convention on jurisdiction and recognition and enforcements of judgments. (7)

      Thus the Judgements Project went forth, endeavouring to replicate the success of the Brussels and Lugano Convention. (8) However, in the years that followed there was great-difficulty extending it to a wider geographical frame work. (9) There was disagreement between countries on issues like the form the Convention would take, the bases of jurisdiction and the difficulties seemed insurmountable. However, renewed negotiations on a new Hague Convention commenced in June of 1997 and by November 1998 a Drafting Committee produced the first preliminary draft text. (10) This evolved into the development of the 1999 Preliminary Draft Convention text (11) and the June 2001 Interim Text, (12) but substantial consensus towards a comprehensive convention remained elusive. Eventually, in an effort to facilitate the judgments Project, the Permanent Bureau suggested in February 2002 that a group of experts convene later in the year and distribute a text (with comments) by either the end of 2002 or early 2003. (13) By March 2003, the expert group produced a preliminary' text focussed on choice of forum and the recognition and enforcement of judgments in civil and commercial matters. (14) The draft was subsequently put before the Special Commission in December 2003 (15) and April 2004. (16) Finally in June 2005, the Hague Convention was adopted at the Diplomatic Session. (17)

    2. Outline of the Hague Convention

      The Hague Convention seeks to promote enforceability of exclusive choice of court agreements and establishes the international recognition and enforcement of resulting 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). The Convention also initially sets out 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). Therefore, if parties select Australia as a venue, the Hague Convention gives full effect to the parties' intentions by requiring the chosen Australian court to hear the case if the choice of court agreement is valid according to the established standards. In particular, there is no discretion (on forum non conveniens or other grounds) in favour of courts of another State. Secondly, the Convention also provides that any other court seized but not chosen must dismiss the case unless the exceptions listed in the Convention apply (Article 6). Lastly, a judgment rendered by the court of a Contracting State must be recognised and enforced by other Contracting States (Article 8) unless one of the exceptions established by the Convention applies (Article 9).

  2. The Difficulty in Establishing Jurisdiction in Australia

    Australian courts are inclined to hold commercial parties to their contractual bargains and will seek to enforce a valid choice of court agreement and stay proceedings commenced in breach of the agreement. However, given the overriding discretionary nature of superior courts' jurisdiction, the enforcement of a choice of court or foreign jurisdiction clause will not be automatic in each instance. In this context, Australian courts have drawn a distinction between exclusive and non-exclusive jurisdiction clauses (EJCs and Non-EJCs respectively); a difference that limits the scope of application and enforcement of a foreign jurisdiction clause (FJC). The difficulties that arise in the application of a FJC discussed below underscores the need for a new regime.

    1. Inherent Powers of a Superior Court

      Once an Australian court is satisfied that the proceedings have been regularly commenced in accordance with the relevant Rules of Court (18), it may still have to consider the effect of a FJC where the plaintiff has brought proceedings in contravention of the parties' agreed choice of forum. In such cases, the court's overriding consideration will be the need to hold parties to their agreement. (19) However, in exercising the 'inherent power ... to regulate proceedings before them' a forum court may also refuse to enforce the choice of court agreement and accept jurisdiction instead. (20) Whether a choice of court clause will be enforced depends on whether it is exclusive or non-exclusive in nature. This distinction is examined in the following section.

    2. Exclusive Jurisdiction Clauses

      EJCs impose a contractual obligation to only litigate in the selected forum, thus precluding any other court as a possible forum for resolving the dispute. (21) Australian courts give considerable weight to the parties' choice of forum and thus will require good reasons to allow for proceedings that...

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