United States Signs the Hague Judgments Convention
March 31, 2022
On March 2, 2022, the United States signed the Convention of July 2, 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters, better known as the Hague Judgments Convention. Specifically, Ms. Jennifer DeWitt Walsh, Acting Deputy Chief of Mission at the U.S. Mission to the Netherlands, signed the Judgments Convention on behalf of the United States during the meeting of the Council on General Affairs and Policy of the Hague Conference on Private International Law, under whose auspices the Judgments Convention was promulgated. In doing so, the United States joined five other countries: Costa Rica, Israel, Russian Federation, Ukraine, and Uruguay. No state has yet ratified or acceded to the Judgments Convention, which has consequently not yet entered into force.
Negotiating the Convention
The Judgments Convention is the result of a process that began in 1992, when the United States suggested the negotiation of a global convention on jurisdiction and the recognition and enforcement of judgments at the Hague Conference. That broader goal proved not to be achievable after draft texts were produced in Special Commission in 1999 and in Diplomatic Session in 2001. The project was revised to focus on jurisdiction based on consent of the parties, resulting in the Convention of June 30, 2005 on Choice of Court Agreements (Choice of Court Convention). The Choice of Court Convention is in effect in the 27 Member States of the European Union (Austria, Belgium, Bulgaria, Croatia, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, and Sweden), as well as in Mexico, Montenegro, Singapore, and the United Kingdom. China, Israel, North Macedonia, Ukraine, and the United States have signed but have not yet ratified or acceded to the Choice of Court Convention.
The Choice of Court Convention contains three basic rules: Article 5 provides that a court chosen in an exclusive choice of court agreement shall have exclusive jurisdiction; Article 6 provides that a court not chosen shall defer to the chosen court; and Article 8 provides that the courts of all contracting states shall recognize and enforce judgments from a court chosen in an exclusive choice of court agreement, subject to an explicit list of bases for non-recognition found in Article 9. Thus, the 2005 Convention is both a jurisdiction convention (limited to one basis of jurisdiction: consent to exclusive dispute settlement in the courts of one state) and a judgments convention (providing for circulation of judgments from cases based on exclusive choice of court agreements). In many ways, it provides a litigation framework on choice of forum that parallels what the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) has done for arbitration.
The appetite for the original project did not disappear with the completion of the Choice of Court Convention. The Hague Conference established an Experts’ Group in 2011 to consider the resumption of the Judgments Project. Some States wanted to revive the original project and again draft a convention that would deal with both direct jurisdiction and the recognition and enforcement of judgments. In 2012, the Council on General Affairs and Policy of the Hague Conference split these two objectives, establishing a Working Group to prepare proposals for a judgments convention and directing the original Experts’ Group to give further study to a separate jurisdiction convention. Working Group completed a Proposed Draft Text of a judgments convention in 2016, and the Council then established a Special Commission to develop the text further. The Experts’ Group was instructed to hold off on further work and to move forward on a jurisdiction convention only after the judgments convention text would be concluded. By May of 2018, the Hague Member States had met in four Special Commission meetings and had a developed text for a Judgments Convention ready to send on to a Diplomatic Session. That Session concluded its work on July 2, 2019, with the adoption of the 2019 Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters as its Final Text.
An Overview of the Judgments Convention
The basic rule of the Judgments Convention is rather simple. Article 4(1) requires that each Contracting State shall recognize and enforce judgments from other Contracting States and permits refusal only on those grounds expressly set out in the Convention.
Article 5 sets up the Convention architecture by providing the gateway rule by which a judgment is determined to be entitled to circulation under the Convention. A judgment is “eligible for recognition and enforcement” under the Convention if it fits one of the listed factors that can connect the case (or a party) to the state of the court of origin. If the facts before the court of origin could have satisfied any one of the thirteen Article 5(1) connecting factors, then the judgment is presumptively qualified for recognition and enforcement under the Convention.
While the Convention generally can be seen as enhancing the recognition and enforcement of judgments, Article 6 departs from this basic approach, providing a rule that prohibits recognition and enforcement, stating that “a judgment that ruled on rights in rem in immovable property shall be recognized and enforced if and only if the property is situated in the State of origin.”
Article 7 provides the general bases for non-recognition of a judgment, even if that judgment meets the requirements of Article 5. The list in Article 7 tracks closely the grounds for non-recognition found in the Choice of Court Convention, which grounds are generally familiar in national law throughout the world and include such concerns as fraud, lack of proper notice, the existence of other inconsistent judgments, and inconsistency with the public policy of the recognizing state.
Articles 8-15 provide additional rules governing specific circumstances and procedures in an action for recognition and enforcement of a judgment. Articles 16-23 are the “general clauses” for purposes of operation of the Convention. Articles 24-32 are the “final clauses” dealing with ratification and related matters.
There has been no real opposition to either the Choice of Court Convention or the Judgments Convention in the United States. The Choice of Court Convention provides respect for party autonomy and places choice of court agreements on an equal footing with arbitration agreements under the New York Convention. Entry into force of the Choice of Court Convention for the United States would provide a level playing field between litigation and arbitration, and would allow a more nuanced choice of a forum for dispute resolution in international commercial contracts.
The Judgments Convention would not dramatically change U.S. law on the recognition and enforcement of foreign judgments in U.S. courts. U.S. law, largely reflected in the 2005 Uniform Foreign-Country Money Judgments Recognition Act, already provides one of the most liberal regimes in the world for the recognition and enforcement of foreign judgments. It is the impact the Convention could have on the recognition and enforcement of U.S. judgments abroad that makes the Convention most valuable from a U.S. perspective.
Earlier efforts to ratify and implement the Choice of Court Convention failed during the Obama Administration when no agreement could be reached on the balance of federal and state law for purposes of implementation. The Uniform Law Commission sought a significant role for state law in that process; something that would have set the Choice of Court Convention apart from the New York Convention and thus would have added an artificial imbalance in the way the two conventions would work to support party choice of a dispute resolution forum and the resulting decisions. The Judgments Convention, in combination with the Choice of Court Convention, may offer a package that can lead to reassessment of that balance and progress toward ratification and implementation of two conventions that offer benefits for U.S. business and legal interests. The signing of the Judgments Convention would seem to indicate an intention in the U.S. State Department to move forward in that process.