Explaining the Hague Judgments Convention to U.S. Lawyers
January 5, 2023
On March 2, 2022, the United States signed the Hague Judgments Convention, a multilateral agreement that seeks to facilitate the recognition and enforcement of judgments across national borders. While there is a vast difference between signing and ratification – as anyone who has followed the halting progress of the Hague Convention on Choice-of-Court Agreements can attest – the fact that the United States has signed the Judgments Convention is a positive step. If the United States were to ratify this treaty, it would make it easier to enforce U.S. judgments in foreign nations where the Convention is in force.
This post builds on prior posts at TLB to explain the basic architecture of the Convention to a U.S. audience. This treaty is based on European models that are quite different from the Uniform Acts that govern the recognition and enforcement of foreign money judgments in the United States. Consequently, it can be difficult for American lawyers to grasp precisely how this particular treaty is supposed to work. This post describes the various provisions of the Convention in such a way as to make it easier for attorneys, judges, and law students in the United States to understand it.
The Convention applies to both monetary and non-monetary judgments rendered by a court in a civil or commercial matter. This is a broad scope. It is important to recognize, however, that there are a host of matters to which the Convention does not apply.
The Convention does not apply judgments relating to revenue, customs, or administrative matters. Nor does it apply to arbitral awards or to interim measures of protection such as Mareva orders. The Convention also does not apply to judgments relating to (1) the status and legal capacity of natural persons, (2) maintenance obligations and other family law matters, (3) wills and succession, (4) insolvency, (5) the carriage of passengers and goods, (6) transboundary marine pollution, (7) liability for nuclear damage, (8) the validity, nullity, or dissolution of entities or the validity of decisions made by entities, (9) the validity of entries in public registers, (10) defamation, (11) privacy, (12) intellectual property, (13) activities of armed forces or law enforcement, (14) antitrust (generally), and (15) sovereign debt. Even if the United States were to ratify the Convention, in short, it would not alter current U.S. law with respect to any of these types of judgments.
The Core Idea
When a foreign court in a nation that has ratified the Convention renders a judgment within the Convention’s scope, that judgment must enforced in the courts of other contracting states so long as the judgment satisfies the requirements laid down in the Convention. In practice, this means that a judgment must be enforced if the foreign court had jurisdiction to hear the case and there no basis for refusing to enforce the judgment. Recognition or enforcement of such judgments may be refused only on grounds specified in the Convention.
Jurisdiction of the Foreign Court
A judgment is eligible for recognition and enforcement under the Convention when the rendering court had jurisdiction to decide the case. Article 5 of the Convention sets out thirteen “bases for recognition and enforcement” where the rendering court will be deemed to have had such jurisdiction. In the spirit of making these bases more comprehensible to U.S. lawyers, the table below explains them through the lens of U.S. legal terms and concepts. They have also been simplified to make them more accessible to individuals not steeped in the language of international treatymaking. The actual text of Article 5 may be found here. All the bases for jurisdiction listed in Article 5 are consistent with the Due Process Clauses of the U.S. Constitution.
|A Simplified (and Americanized) Summary of Article 5|
|A judgment is eligible for recognition and enforcement if one of the following requirements is met:|
|Domicile||The person against whom recognition or enforcement is sought is a habitual resident of the rendering state. (5(a))|
|Consent||The person against whom recognition or enforcement is sought consented to the jurisdiction of the rendering court in a non-exclusive forum selection clause before proceedings began. (5)(m)|
|The person against whom recognition or enforcement is sought consented to the jurisdiction of the rendering court after proceedings began. (5(e))|
|Waiver||The person against whom recognition or enforcement is sought argued the merits of the case before the rendering court without contesting jurisdiction and thereby waived their right to argue the court lacked jurisdiction. (5(f))|
|Acts and Activities
in the Rendering State
|The natural person against whom recognition or enforcement is sought had their principal place of business in the rendering state and the claim on which the judgment is based arose out of the in-state activities of that business. (5(b))|
|The person against whom recognition or enforcement is sought maintained a branch, agency, or other establishment without separate legal personality in the rendering state and the claim on which the judgment is based arose out of the in-state activities of that branch, agency, or establishment. (5(d))|
|The judgment ruled on a contract claim and performance of the contract obligation took place or should have taken place in the rendering state. (5(g))|
|The judgment ruled on a non-contractual obligation arising from death, physical injury, damage to or loss of tangible property, and the act or omission directly causing such harm occurred in the rendering state. (5(j))|
|Real Property||The judgment ruled on a lease of immovable property located in the rendering state. (5(h))|
|The judgment ruled against the defendant on a contractual obligation secured by a right in rem in immovable property located in the rendering state. (5(i))|
|Trusts||The judgment concerns the validity, construction, effects, administration, or variation of a trust created voluntarily and evidenced in writing, and the rendering state was expressly or impliedly designated as the principal place of administration in the trust instrument. (5(k))|
|Claimants and Counterclaimants||The person against whom recognition or enforcement is sought is the person that brought the claim, other than a counterclaim, on which the judgment is based. (5(c))|
The judgment ruled on a counterclaim arising out of the same transaction as the original claim or the judgment was entered against the counterclaimant. (5(l))
When the person against whom enforcement is sought is a consumer or an employee, the provisions set forth above relating to prior consent, waiver, and contract performance do not apply. In addition, the provision relating to subsequent consent applies to consumers and employees only if the required consent was specifically addressed to the rendering court.
Article 6 states that a judgment that rules on rights in rem in real property shall be recognized and enforced if and only if the property is located in the rendering state. Contracting states may not deviate from this rule (even if they wish to be more generous than the Convention allows).
Refusal of Recognition and Enforcement
Article 7 of the Convention contains a list of reasons why the courts in one contracting state may validly refuse to enforce a judgment rendered by another contracting state. A summary of these reasons appears below. Again, these reasons have been simplified in places to make them easier to follow. The actual text of Article 7 may be found here. These grounds for non-recognition are similar to those found in the Uniform Acts.
|A Simplified (and Americanized) Summary of Article 7|
|Recognition or enforcement may be refused if:|
|Defective Service of Process||The summons was not received by the defendant in sufficient time and in such a way as to enable them to arrange for their defense or was notified to the defendant in the requested State in a manner that is incompatible with fundamental principles of the requested State concerning service of documents. (7(1)(a))|
|Fraud||The judgment was obtained by fraud. (7(1)(b))|
|Public Policy||Recognition or enforcement would be manifestly incompatible with the public policy of the requested State. (7(1)(c))|
|Forum Selection Clause||The proceedings in the rendering state were contrary to an agreement, or a designation in a trust instrument, under which the dispute in question was to be determined in a court of a State other than the rendering state. (7(1)(d))|
|Inconsistent Judgments||The judgment is inconsistent with a judgment given by a court of the requested State in a dispute between the same parties. (7(1)(e))|
|The judgment is inconsistent with an earlier judgment given by a court of another state between the same parties on the same subject matter, provided that the earlier judgment fulfils the conditions necessary for its recognition in the requested State. (7(1)(f))|
In addition to the provisions on jurisdiction and the grounds for non-recognition, the Convention includes several other provisions that will be relevant to U.S. practice if the treaty is ratified.
Under Article 10 of the Convention, recognition or enforcement of a judgment may be refused to the extent that the judgment awards exemplary or punitive damages that do not compensate a party for actual loss or harm suffered. Judgments that include punitive damages may be enforced only to the extent they are compensatory.
Under Article 11, certain judicial settlements in the rendering state which are enforceable as judgments in that state are enforceable under the Convention in the same manner as a judgment rendered by a court in that state.
Documents to be Produced
Under Article 12, the person seeking recognition and enforcement of the judgment must produce the following documents: (1) a complete and certified copy of the judgment, (2) a certified copy of the document providing notice to the defendant (in cases where the judgment was given by default), (3) any documents necessary to establish that the judgment is enforceable in the rendering state, and (4) a certificate from a court in the rendering state stating that the judicial settlement is enforceable in the same manner as a judgment (in cases involving judicial settlements).
Under Article 13, the procedural law for recognizing and enforcing a judgment shall generally be that of the state in which enforcement is sought.
More Generous Treatment
Under Article 15, the Convention does not prevent a state from being more generous when it comes to the recognition or enforcement of judgments than is required under the Convention. In this respect, the Convention constitutes a floor rather than a ceiling for everything except for in rem judgments relating to real property (as discussed above in Article 6). This means that existing provisions of U.S. law granting more favorable treatment to foreign judgments than required under the Convention may continue to provide a valid basis for recognition and enforcement post-ratification.
Most scholars and commentators agree that ratifying the Hague Judgments Convention would not bring about any drastic change in U.S. law. Most foreign judgments are enforced under current law. Most foreign judgments would be enforced under the rules laid down in the Convention. The true significance of the Convention for the United States lies in its ability to facilitate the recognition and enforcement of U.S. judgments abroad. One hopes that the obvious benefits of this tradeoff – modest changes to U.S. law in exchange for greatly improved portability of U.S. judgments – will lead to speedy ratification of the Hague Judgments Convention in the United States. Time will tell.