On July 2, 2019, the Hague Conference on Private International Law (HCCH) adopted a new multilateral Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters.Footnote 1 When brought into force,Footnote 2 the Convention will commit contracting states to recognize and enforce civil and commercial judgments rendered by the courts of other contracting states, and to do so without a substantive review of the merits of the underlying dispute.
The goal of the Convention is to fill a significant gap in the field of private international law by establishing for foreign judicial judgments a regime to complement the 2005 Hague Convention on Choice of Court Agreements,Footnote 3 and, in some respects, the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.Footnote 4 If widely adopted and fairly implemented, the new Convention could contribute significantly to the stability and predictability of transborder commercial transactions and thereby promote trade, investment, and the growth of the global economy.
Traditionally, the recognition and enforcement of judgments rendered by foreign courts has been a matter exclusively governed by the domestic law and practice of each state and therefore subject to differences in national approaches to such matters as jurisdiction, applicable law, and the amount and nature of damages. The absence of agreed-upon international standards has meant that judgments rendered by the courts in one country face a substantial risk of non-enforcement by the courts of another. In an increasingly interconnected global economy, where cross-border transactions are common and defendants may well have no assets within the jurisdiction against which a successful plaintiff can enforce its judgment, the result has been a significant impediment to the complete and efficient resolution of transnational disputes.
The new Convention is hardly the first effort to address this problem. Over the years, a number of multilateral attempts have been made, most notably through the 1971 Hague Convention on the Recognition and Enforcements of Foreign Judgments in Civil and Commercial Matters, an ultimately unsuccessful effort to resolve the problem by addressing both (1) the proper standards for the “rendering” court's exercise of jurisdiction over foreign defendants in the underlying dispute, and (2) the rules for the “enforcing” court's treatment of the resulting judgments.Footnote 5 That instrument failed to garner widespread support.Footnote 6 A renewed effort to address the issue began in 1992 and continued for ten years without achieving consensus on a text.Footnote 7
The HCCH's focus then shifted to a more circumscribed effort centered on giving effect to contractual agreements to resolve disputes in the courts of a specified country. It succeeded in producing the 2005 Hague Convention on Choice of Court Agreements,Footnote 8 which has so far been ratified, acceded to, or approved by thirty-one states and the European Union.Footnote 9
Regional efforts to promote the recognition and enforcement of foreign judgments by multilateral treaty have had somewhat greater success, for example in the Inter-American system.Footnote 10 Within the European Union, judgments rendered by the court of an EU member state today circulate in the other member states under the so-called Brussels I Recast Regulation, which requires the automatic recognition of one court's judgment in every other EU member state.Footnote 11 In addition, reciprocal enforcement of judgments has also been frequently addressed on a bilateral basis by judicial assistance treaties.Footnote 12
In 2012, the Hague Conference returned to the issue of judgments enforcement with a renewed mandate from its Council on General Affairs and Policy, and following years of intensive negotiation has now succeeded in adopting a final text. Like its 1971 predecessor, the new Convention addresses only the question of recognition and enforcement of judgments without also attempting to articulate rules for the exercise of “primary” jurisdiction over the underlying dispute by the rendering court. Unlike the 1971 Convention, however, instead of requiring that each contracting state opt into relations with every other contracting state, the 2019 Judgments Convention permits a contracting state explicitly to opt out of Convention relations with another contracting state.
The negotiations were protracted and frequently difficult, and a successful outcome was never assured.Footnote 13 The final text is lengthy (thirty-two articles), technical, and far more detailed than (for instance) the 1958 New York Convention, which today boasts 159 states parties.Footnote 14 Yet the fact that the Diplomatic Session proceeded on the basis of consensus and resulted in the unanimous adoption of the text by the members of the Hague Conference—which today includes a regionally more diverse group of states than it did during its earlier efforts on this subject—gives some reason to think that it may well find significantly broader acceptance in the international community than its 1971 predecessor.Footnote 15
Core Obligations
Among the core obligations of the new Convention is the one found in Article 4. It provides that:
[a] judgment given by a court of a Contracting State (State of origin) shall be recognised and enforced in another Contracting State (requested State). … Recognition or enforcement may be refused only on the grounds specified in this Convention. … There shall be no review of the merits of the judgment in the requested State.Footnote 16
The term “judgment” is defined broadly to include:
… any decision on the merits given by a court, whatever that decision may be called, including a decree or order, and a determination of costs or expenses of the proceedings by the court (including an officer of the court), provided that the determination relates to a decision on the merits which may be recognised or enforced under this Convention. An interim measure of protection is not a judgment.Footnote 17
This obligation, however, extends only to final judgments that (for purposes of recognition) have “effect in the State of origin” and (for enforcement purposes) are “enforceable in the State of origin.”Footnote 18 Recognition may be postponed or refused if the judgment in question is “the subject of review in the State of origin or if the time limit for seeking ordinary review has not expired.”Footnote 19
Substantive Scope
The Convention applies only to judgments in “civil or commercial matters.”Footnote 20 That critical term is not defined except by the exclusion of “revenue, customs or administrative matters.”Footnote 21 and “arbitration and related proceedings.”Footnote 22 However, “the mere fact that a State, including a government, a governmental agency or any person acting for a State, was a party to the proceedings” does not exclude the resulting judgment from the Convention's scope.Footnote 23
Exclusions
That said, the substantive reach of the Convention is circumscribed by a lengthy list—set forth in Article 2(1)—of specific types of legal issues (“matters”) that are excluded from the “civil and commercial” reach of the Convention. This list includes:
(a) the status and legal capacity of natural persons;
(b) maintenance obligations;
(c) other family law matters, including matrimonial property regimes and other rights or obligations arising out of marriage or similar relationships;
(d) wills and succession;
(e) insolvency, composition, resolution of financial institutions, and analogous matters;
(f) the carriage of passengers and goods;
(g) transboundary marine pollution, marine pollution in areas beyond national jurisdiction, ship-source marine pollution, limitation of liability for maritime claims, and general average;
(h) liability for nuclear damage;
(i) the validity, nullity, or dissolution of legal persons or associations of natural or legal persons, and the validity of decisions of their organs;
(j) the validity of entries in public registers;
(k) defamation;
(l) privacy;
(m) intellectual property;
(n) activities of armed forces, including the activities of their personnel in the exercise of their official duties;
(o) law enforcement activities, including the activities of law enforcement personnel in the exercise of their official duties;
(p) anti-trust (competition) matters, except where the judgment is based on conduct that constitutes an anti-competitive agreement or concerted practice among actual or potential competitors to fix prices, make rigged bids, establish output restrictions or quotas, or divide markets by allocating customers, suppliers, territories or lines of commerce, and where such conduct and its effect both occurred in the State of origin;
(q) sovereign debt restructuring through unilateral State measures.
A judgment is not excluded, however,
where a matter to which this Convention does not apply arose merely as a preliminary question in the proceedings in which the judgment was given, and not as an object of the proceedings. In particular, the mere fact that such a matter arose by way of defence does not exclude a judgment from the Convention, if that matter was not an object of the proceedings.Footnote 24
Several of the above exclusions occasioned significant debate during the negotiations:
Defamation and privacy. In this rapidly evolving area, significant differences exist between various legal systems (especially the European, Latin American, and North American systems) with respect not only to the definition and scope of principles of privacy but also regarding the types of actions that can be brought for infringement of privacy rights, the jurisdiction of national courts to hear such claims, and the available remedies for violations, particularly in the context of the Internet and electronic communications. In this regard, one need only consider the problems presented by global “take down” orders.Footnote 25 Despite the desire of a number of participating states to promote privacy principles through the Convention, no consensus could be found on these issues.
Intellectual property. Whether and how to include claims involving intellectual property rights (copyright, trademarks, and patents) was strenuously debated during the negotiations, including during the final session. A number of delegations argued energetically for the inclusion of judgments involving such matters, given their increasing importance in the context of international business ventures. Others resisted on a number of grounds, including that intellectual property essentially involves issues of governmental policy and are not merely “civil or commercial” matters.
Antitrust/competition. Here, too, the question of separating “civil or commercial” matters from governmental enforcement became contentious. Underlying the debate were differences in approach to regulating anti-competitive conduct. While in U.S. law and practice, litigation in this area may be brought by (as well as against) private entities, for many other states the field remains primarily one of governmental regulation and enforcement. A lack of common approaches to anticompetitive conduct complicated the debate.
Transboundary marine pollution. Once again, sharp differences emerged in an evolving area of law and practice. Many delegations contended that enforcement of constraints on transboundary marine pollution was primarily a governmental rather than civil or commercial function, and in fact was regulated by other international conventions and procedures. A compromise was reached regarding recognition and enforcement of judgments in this increasingly important area, leaving within scope maritime pollution within the boundaries of national jurisdiction but excluding marine pollution that is “transboundary,” “in areas beyond national jurisdiction,” or “ship-source.”Footnote 26
Indirect Jurisdictional Requirements
Although the Convention does not speak directly to the legitimacy of the jurisdictional basis (or bases) on which the “rendering” court adjudicated the underlying dispute itself, judgments are eligible for recognition and enforcement under the Convention if they meet one of the jurisdictional tests in Article 5(1). Broadly described, these “filters” (which were of particular importance to the civil law states during the negotiations) limit a contracting state's recognition and enforcement obligations to judgments in which either: (1) a connection existed between the state of origin and the defendant—for example where the judgment debtor was habitually resident, had its principal place of business, or maintained a branch, agency, or other establishment without separate legal personality in the state of origin (in this latter case, provided that the claim on which the judgment is based arose out of the activities of that branch, agency, or other establishment);Footnote 27 (2) the jurisdiction of the court in the state of origin was based on the agreement of the parties, whether by express consent, including through a choice of court agreement, designated in an agreement or indirectly, for instance where the defendant argued on the merits before the court of origin without contesting jurisdiction within the timeframe provided in the law of the state of origin;Footnote 28 or (3) a connection existed between the claim and the state of origin, such as when the judgment was given by the court in which the contractual obligation took place (or should have), or the court 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 state of origin, irrespective of where that harm occurred, or the ruling was on a lease of immovable property located in that state.Footnote 29
Special rules are articulated for claims involving trusts, choice of court agreements, consumer contracts, contracts of employment, and residential leases of immovable property (tenancy).Footnote 30 The discretion of the enforcing court is further limited by Article 13(2), which effectively excludes forum non conveniens objections by providing that recognition and enforcement may not be refused on the ground that it “should be sought in another State.”Footnote 31
Additional Constraints
Article 6 provides that a judgment that ruled on rights in rem in immovable property shall be recognized and enforced “only if the property is situated in the State of origin.”Footnote 32 Unlike the Article 5 filters (which establish a minimum standard for recognition and enforcement), this provision mandates (subject to Article 7) recognition and enforcement of a judgment rendered by a court of the state where the property is located while precluding the courts of a contracting state from recognizing and enforcing a judgment rendered by the court of any other state.
Article 7 specifies a number of defenses to recognition and enforcement, including where there has been improper service of the documents instituting the proceeding or failure to notify the defendant in a timely and sufficient manner,Footnote 33 the judgment has been obtained by fraud,Footnote 34 recognition or enforcement would be “manifestly incompatible with the public policy of the requested State,”Footnote 35 the proceedings were contrary to a choice of court agreement,Footnote 36 the judgment is inconsistent with a judgment given by a court in the requested state between the same parties,Footnote 37 or the judgment is inconsistent with an earlier judgment given by the court of another state in a dispute between the same parties on the same subject matter.Footnote 38
These are exhaustive grounds, in that recognition and enforcement may be refused only on the basis of the enumerated grounds. They are discretionary, not mandatory. Thus, a state “may” refuse recognition and enforcement based on any one of them.
In what may well turn out in practice to be the most significant restriction (at least from the perspective of plaintiffs that obtain substantial monetary judgments in the United States), Article 10 permits a court to refuse recognition or enforcement “if, and to the extent that, the judgment awards damages, including exemplary or punitive damages, that do not compensate a party for actual loss or harm suffered.”Footnote 39 This provision reflects, of course, a significant point of difference in legislative policy and judicial practice between the United States and many other jurisdictions around the world.
Articles 12 and 13 address, respectively, the documents required to be produced by the party seeking recognition and enforcement and the procedure to be followed by the courts of the requested State. Article 14 precludes the enforcing court from requiring the party seeking recognition or enforcement to post “security, bond or deposit … on the sole ground that such party is a foreign national or is not domiciled or resident” in the state where enforcement is sought.Footnote 40
Uniform Interpretation
In conformity with several other private international law conventions adopted by the Hague Conference,Footnote 41 Article 20 provides that “[i]n the interpretation of this Convention, regard shall be had to its international character and to the need to promote uniformity in its application.” Thus, the courts of one contracting state should take into consideration (although are not necessarily bound by) relevant decisions of the courts of other contracting states with respect to the meaning and effect of the Convention's provisions.
Uniform interpretation is also promoted by Article 21, which provides for review of the “operation” of the Convention at regular intervals—as has generally been the case with other Hague conventions.
Non-unitary States
Also in common with other recently concluded Hague conventions, special provision is made for the application of the Convention by “non-unified legal systems,” meaning contracting states “in which two or more systems of law apply in different territorial units.”Footnote 42 In general, references in the Convention to the law, procedure, or courts of a state are to be construed as referring, where appropriate, to the law, procedure, or courts of the relevant territorial unit, although “[a] court in a territorial unit of a Contracting State with two or more territorial units in which different systems of law apply shall not be bound to recognise or enforce a judgment from another Contracting State solely because the judgment has been recognised or enforced in another territorial unit of the same Contracting State under this Convention.”Footnote 43
The latter exception is unlikely to operate with respect to the United States, in light of the “Full Faith and Credit” clause of the U.S. Constitution and the fact that a very substantial degree of uniformity exists among the constituent states of the Union by virtue of the uniform laws applicable to the recognition and enforcement of foreign-country judgments.Footnote 44
Regional Economic Integration Organizations
The Convention follows recent Hague Conference practice by expressly recognizing that a “Regional Economic Integration Organisation” constituted solely by sovereign states may sign, accept, approve, or accede to the Convention if it has competence over “some or all of the matters governed by this Convention.”Footnote 45 Moreover, such an organization may claim exclusive competence over all matters governed by the Convention, so that its member states cannot be parties in their own right but will instead be bound by virtue of the organization's signature, acceptance, approval, or accession.Footnote 46
These provisions are intended to permit the European Union in particular to participate in the treaty regime since it has exclusive competence over matters addressed in the 2019 Judgments Convention. In the case of the 2005 Convention on Choice of Court Agreements, the EU became a party in its own right along with all of its member states.
Exclusion of Treaty Relations
In most multilateral treaties, a state party is bound, from the time that the agreement comes into force for it, by its obligations with regard to all other states parties. The 2019 Judgments Convention, however, embraced a somewhat unique (although not entirely unprecedented) mechanism that permits contracting states the option of excluding treaty relations with one or more other contracting states. To take advantage of this “bilateralization” provision, the contracting state in question need only notify the depositary (i.e., the Ministry of Foreign Affairs of the Netherlands) that “the ratification, acceptance, approval or accession of another State shall not have the effect of establishing relations between the two States pursuant to this Convention.”Footnote 47
This provision reflected a concern, driven by the prospect of widespread adherence to the Convention, that contracting states might be bound to recognize and enforce judgments from other states whose legal systems were considered likely to produce biased, unprincipled, or defective judgments. Rather than compromise on the mandatory nature of the recognition and enforcement obligations that lie at the heart of the Convention, or attempt to craft some standards by which requests from states to become party to the Convention could be judged, or encourage greater reliance on the public policy exception to the obligation to recognize and enforce judgments under Article 7(1)(c), the negotiators accepted this limited opt out mechanism as a point of compromise.Footnote 48
Under Article 29(4), a contracting state may withdraw a “no relations” notification at any time.
Declarations
Additional flexibility is provided by Article 30, which allows contracting states to utilize a fairly extensive system of declarations with respect to no less than eight substantive areas of the Convention.
This system permits contracting states, for example, to opt out of the prohibition against requiring any security, bond, or deposit in connection with an application for enforcement of a judgment under Article 14(1) and to refuse to recognize or enforce judgments given by courts of another contracting state with respect to parties who were resident in (and all other elements relevant to the dispute were connected only with) the requested state under Article 17. Under Article 19, they may declare that they will not apply the Convention to judgments arising from proceedings in which the state or a government agency of that state (or a natural person acting for that state or government agency) is a party. Where a state includes territorial (subnational) units with different systems of law, Article 25 permits it to declare that the Convention extends only to some of them.
Perhaps most significantly, Article 18 provides that a contracting state may by declaration exclude the Convention's application to “a specific matter” at to which it “has a strong interest in not applying” the Convention. No criteria are provided by which to determine whether a given interest is “strong,” although the declaring state is enjoined to “ensure that the declaration is no broader than necessary and that the specific matter excluded is clearly and precisely defined.”Footnote 49 This provision clearly provides an additional element of flexibility designed to encourage widespread adherence by states with differing legal systems. Whether it will prove in practice to work against the goal of uniformity in interpretation and application remains to be seen.
Contributions and Prospects
The 2019 Judgments Convention is detailed, complicated, and full of contingencies and compromises. Its ultimate success will depend both on the relative rapidity of ratifications and the willingness of domestic courts to interpret and implement its provisions in the broad pro-enforcement spirit in which they were adopted. It is far too early to predict whether the Convention will have as significant an impact as the New York Convention has had over the past sixty years.
Still, the new Convention seems in principle to offer real promise of a significant departure from the current regime in which the recognition and enforcement of foreign civil and commercial judgments remains largely subject to varying domestic rules and practices that on the whole do not readily give effect to judgments rendered by foreign courts. The Convention seeks to improve upon this state of affairs by enhancing legal certainty and predictability, reducing transactional and litigation costs in cross-border civil and commercial matters, and, ultimately, providing greater certainty in multilateral trade and investment.
Because the text of the Convention was adopted by all states that participated in its negotiation (as well as the European Union), and because adherence is not restricted to members of the Hague Conference, the Convention is likely to be brought into force quickly and to gain additional contracting states at a fairly rapid pace.
Prospects for speedy U.S. adherence are more difficult to judge. Because, on the whole, U.S. judgments receive less favorable treatment in foreign courts than foreign judgments do in U.S. courts, the regime created by the new Convention would seem to benefit U.S. judgment holders, even taking into account limitations such as the exclusion of non-compensatory (exemplary or punitive) damages. One could therefore expect support—perhaps even enthusiasm—from the U.S. business and legal communities.
However, the general process of treaty ratification in the United States has moved slowly in recent years, and depending on how the issue of domestic implementation of the Convention is approached, adherence could face some challenges. In the United States, the recognition and enforcement of foreign country judgments today remains primarily a matter of state law.Footnote 50 To be sure, U.S. courts frequently apply uniform state law, with a significant majority of states having adopted either the 1962 Uniform Foreign Money Judgments Recognition Act or the 2005 Uniform Foreign-Country Money Judgments Recognition Act.Footnote 51
Another difficult issue may be how to ensure consistent interpretation and application of the Convention throughout the U.S. judicial system, at the state as well as federal levels. As a duly ratified treaty, the Convention would become part of the Supreme Law of the Land.Footnote 52 Yet one could readily anticipate some resistance to allowing the Convention to “federalize” recognition and enforcement of foreign judgments. At the same time, placing the task of treaty interpretation and implementation solely in the hands of the state courts might open the door to discordant results and, in the worst case, possible inconsistencies with U.S. treaty obligations that the federal government would have limited or no ability to remedy. Some form of joint or coordinated implementation involving both the federal and state governments would seem a logical approach.
Similar federalism considerations have to date frustrated U.S. adherence to the 2005 Choice of Court Convention and led to a significant debate over the practicality of implementing that treaty (and other private international law instruments) on the basis of “cooperative federalism.”Footnote 53 Yet the problems are not insoluble. Both the 2005 Convention and the 2019 Judgments Convention have the clear potential to be beneficial to U.S. interests, including both those of the business and commercial communities and the federal and state judiciaries. One possibility would be to take up the domestic implementation of both instruments at the same time.
On July 2, 2019, the Hague Conference on Private International Law (HCCH) adopted a new multilateral Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters.Footnote 1 When brought into force,Footnote 2 the Convention will commit contracting states to recognize and enforce civil and commercial judgments rendered by the courts of other contracting states, and to do so without a substantive review of the merits of the underlying dispute.
The goal of the Convention is to fill a significant gap in the field of private international law by establishing for foreign judicial judgments a regime to complement the 2005 Hague Convention on Choice of Court Agreements,Footnote 3 and, in some respects, the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.Footnote 4 If widely adopted and fairly implemented, the new Convention could contribute significantly to the stability and predictability of transborder commercial transactions and thereby promote trade, investment, and the growth of the global economy.
Traditionally, the recognition and enforcement of judgments rendered by foreign courts has been a matter exclusively governed by the domestic law and practice of each state and therefore subject to differences in national approaches to such matters as jurisdiction, applicable law, and the amount and nature of damages. The absence of agreed-upon international standards has meant that judgments rendered by the courts in one country face a substantial risk of non-enforcement by the courts of another. In an increasingly interconnected global economy, where cross-border transactions are common and defendants may well have no assets within the jurisdiction against which a successful plaintiff can enforce its judgment, the result has been a significant impediment to the complete and efficient resolution of transnational disputes.
The new Convention is hardly the first effort to address this problem. Over the years, a number of multilateral attempts have been made, most notably through the 1971 Hague Convention on the Recognition and Enforcements of Foreign Judgments in Civil and Commercial Matters, an ultimately unsuccessful effort to resolve the problem by addressing both (1) the proper standards for the “rendering” court's exercise of jurisdiction over foreign defendants in the underlying dispute, and (2) the rules for the “enforcing” court's treatment of the resulting judgments.Footnote 5 That instrument failed to garner widespread support.Footnote 6 A renewed effort to address the issue began in 1992 and continued for ten years without achieving consensus on a text.Footnote 7
The HCCH's focus then shifted to a more circumscribed effort centered on giving effect to contractual agreements to resolve disputes in the courts of a specified country. It succeeded in producing the 2005 Hague Convention on Choice of Court Agreements,Footnote 8 which has so far been ratified, acceded to, or approved by thirty-one states and the European Union.Footnote 9
Regional efforts to promote the recognition and enforcement of foreign judgments by multilateral treaty have had somewhat greater success, for example in the Inter-American system.Footnote 10 Within the European Union, judgments rendered by the court of an EU member state today circulate in the other member states under the so-called Brussels I Recast Regulation, which requires the automatic recognition of one court's judgment in every other EU member state.Footnote 11 In addition, reciprocal enforcement of judgments has also been frequently addressed on a bilateral basis by judicial assistance treaties.Footnote 12
In 2012, the Hague Conference returned to the issue of judgments enforcement with a renewed mandate from its Council on General Affairs and Policy, and following years of intensive negotiation has now succeeded in adopting a final text. Like its 1971 predecessor, the new Convention addresses only the question of recognition and enforcement of judgments without also attempting to articulate rules for the exercise of “primary” jurisdiction over the underlying dispute by the rendering court. Unlike the 1971 Convention, however, instead of requiring that each contracting state opt into relations with every other contracting state, the 2019 Judgments Convention permits a contracting state explicitly to opt out of Convention relations with another contracting state.
The negotiations were protracted and frequently difficult, and a successful outcome was never assured.Footnote 13 The final text is lengthy (thirty-two articles), technical, and far more detailed than (for instance) the 1958 New York Convention, which today boasts 159 states parties.Footnote 14 Yet the fact that the Diplomatic Session proceeded on the basis of consensus and resulted in the unanimous adoption of the text by the members of the Hague Conference—which today includes a regionally more diverse group of states than it did during its earlier efforts on this subject—gives some reason to think that it may well find significantly broader acceptance in the international community than its 1971 predecessor.Footnote 15
Core Obligations
Among the core obligations of the new Convention is the one found in Article 4. It provides that:
[a] judgment given by a court of a Contracting State (State of origin) shall be recognised and enforced in another Contracting State (requested State). … Recognition or enforcement may be refused only on the grounds specified in this Convention. … There shall be no review of the merits of the judgment in the requested State.Footnote 16
The term “judgment” is defined broadly to include:
… any decision on the merits given by a court, whatever that decision may be called, including a decree or order, and a determination of costs or expenses of the proceedings by the court (including an officer of the court), provided that the determination relates to a decision on the merits which may be recognised or enforced under this Convention. An interim measure of protection is not a judgment.Footnote 17
This obligation, however, extends only to final judgments that (for purposes of recognition) have “effect in the State of origin” and (for enforcement purposes) are “enforceable in the State of origin.”Footnote 18 Recognition may be postponed or refused if the judgment in question is “the subject of review in the State of origin or if the time limit for seeking ordinary review has not expired.”Footnote 19
Substantive Scope
The Convention applies only to judgments in “civil or commercial matters.”Footnote 20 That critical term is not defined except by the exclusion of “revenue, customs or administrative matters.”Footnote 21 and “arbitration and related proceedings.”Footnote 22 However, “the mere fact that a State, including a government, a governmental agency or any person acting for a State, was a party to the proceedings” does not exclude the resulting judgment from the Convention's scope.Footnote 23
Exclusions
That said, the substantive reach of the Convention is circumscribed by a lengthy list—set forth in Article 2(1)—of specific types of legal issues (“matters”) that are excluded from the “civil and commercial” reach of the Convention. This list includes:
(a) the status and legal capacity of natural persons;
(b) maintenance obligations;
(c) other family law matters, including matrimonial property regimes and other rights or obligations arising out of marriage or similar relationships;
(d) wills and succession;
(e) insolvency, composition, resolution of financial institutions, and analogous matters;
(f) the carriage of passengers and goods;
(g) transboundary marine pollution, marine pollution in areas beyond national jurisdiction, ship-source marine pollution, limitation of liability for maritime claims, and general average;
(h) liability for nuclear damage;
(i) the validity, nullity, or dissolution of legal persons or associations of natural or legal persons, and the validity of decisions of their organs;
(j) the validity of entries in public registers;
(k) defamation;
(l) privacy;
(m) intellectual property;
(n) activities of armed forces, including the activities of their personnel in the exercise of their official duties;
(o) law enforcement activities, including the activities of law enforcement personnel in the exercise of their official duties;
(p) anti-trust (competition) matters, except where the judgment is based on conduct that constitutes an anti-competitive agreement or concerted practice among actual or potential competitors to fix prices, make rigged bids, establish output restrictions or quotas, or divide markets by allocating customers, suppliers, territories or lines of commerce, and where such conduct and its effect both occurred in the State of origin;
(q) sovereign debt restructuring through unilateral State measures.
A judgment is not excluded, however,
where a matter to which this Convention does not apply arose merely as a preliminary question in the proceedings in which the judgment was given, and not as an object of the proceedings. In particular, the mere fact that such a matter arose by way of defence does not exclude a judgment from the Convention, if that matter was not an object of the proceedings.Footnote 24
Several of the above exclusions occasioned significant debate during the negotiations:
Defamation and privacy. In this rapidly evolving area, significant differences exist between various legal systems (especially the European, Latin American, and North American systems) with respect not only to the definition and scope of principles of privacy but also regarding the types of actions that can be brought for infringement of privacy rights, the jurisdiction of national courts to hear such claims, and the available remedies for violations, particularly in the context of the Internet and electronic communications. In this regard, one need only consider the problems presented by global “take down” orders.Footnote 25 Despite the desire of a number of participating states to promote privacy principles through the Convention, no consensus could be found on these issues.
Intellectual property. Whether and how to include claims involving intellectual property rights (copyright, trademarks, and patents) was strenuously debated during the negotiations, including during the final session. A number of delegations argued energetically for the inclusion of judgments involving such matters, given their increasing importance in the context of international business ventures. Others resisted on a number of grounds, including that intellectual property essentially involves issues of governmental policy and are not merely “civil or commercial” matters.
Antitrust/competition. Here, too, the question of separating “civil or commercial” matters from governmental enforcement became contentious. Underlying the debate were differences in approach to regulating anti-competitive conduct. While in U.S. law and practice, litigation in this area may be brought by (as well as against) private entities, for many other states the field remains primarily one of governmental regulation and enforcement. A lack of common approaches to anticompetitive conduct complicated the debate.
Transboundary marine pollution. Once again, sharp differences emerged in an evolving area of law and practice. Many delegations contended that enforcement of constraints on transboundary marine pollution was primarily a governmental rather than civil or commercial function, and in fact was regulated by other international conventions and procedures. A compromise was reached regarding recognition and enforcement of judgments in this increasingly important area, leaving within scope maritime pollution within the boundaries of national jurisdiction but excluding marine pollution that is “transboundary,” “in areas beyond national jurisdiction,” or “ship-source.”Footnote 26
Indirect Jurisdictional Requirements
Although the Convention does not speak directly to the legitimacy of the jurisdictional basis (or bases) on which the “rendering” court adjudicated the underlying dispute itself, judgments are eligible for recognition and enforcement under the Convention if they meet one of the jurisdictional tests in Article 5(1). Broadly described, these “filters” (which were of particular importance to the civil law states during the negotiations) limit a contracting state's recognition and enforcement obligations to judgments in which either: (1) a connection existed between the state of origin and the defendant—for example where the judgment debtor was habitually resident, had its principal place of business, or maintained a branch, agency, or other establishment without separate legal personality in the state of origin (in this latter case, provided that the claim on which the judgment is based arose out of the activities of that branch, agency, or other establishment);Footnote 27 (2) the jurisdiction of the court in the state of origin was based on the agreement of the parties, whether by express consent, including through a choice of court agreement, designated in an agreement or indirectly, for instance where the defendant argued on the merits before the court of origin without contesting jurisdiction within the timeframe provided in the law of the state of origin;Footnote 28 or (3) a connection existed between the claim and the state of origin, such as when the judgment was given by the court in which the contractual obligation took place (or should have), or the court 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 state of origin, irrespective of where that harm occurred, or the ruling was on a lease of immovable property located in that state.Footnote 29
Special rules are articulated for claims involving trusts, choice of court agreements, consumer contracts, contracts of employment, and residential leases of immovable property (tenancy).Footnote 30 The discretion of the enforcing court is further limited by Article 13(2), which effectively excludes forum non conveniens objections by providing that recognition and enforcement may not be refused on the ground that it “should be sought in another State.”Footnote 31
Additional Constraints
Article 6 provides that a judgment that ruled on rights in rem in immovable property shall be recognized and enforced “only if the property is situated in the State of origin.”Footnote 32 Unlike the Article 5 filters (which establish a minimum standard for recognition and enforcement), this provision mandates (subject to Article 7) recognition and enforcement of a judgment rendered by a court of the state where the property is located while precluding the courts of a contracting state from recognizing and enforcing a judgment rendered by the court of any other state.
Article 7 specifies a number of defenses to recognition and enforcement, including where there has been improper service of the documents instituting the proceeding or failure to notify the defendant in a timely and sufficient manner,Footnote 33 the judgment has been obtained by fraud,Footnote 34 recognition or enforcement would be “manifestly incompatible with the public policy of the requested State,”Footnote 35 the proceedings were contrary to a choice of court agreement,Footnote 36 the judgment is inconsistent with a judgment given by a court in the requested state between the same parties,Footnote 37 or the judgment is inconsistent with an earlier judgment given by the court of another state in a dispute between the same parties on the same subject matter.Footnote 38
These are exhaustive grounds, in that recognition and enforcement may be refused only on the basis of the enumerated grounds. They are discretionary, not mandatory. Thus, a state “may” refuse recognition and enforcement based on any one of them.
In what may well turn out in practice to be the most significant restriction (at least from the perspective of plaintiffs that obtain substantial monetary judgments in the United States), Article 10 permits a court to refuse recognition or enforcement “if, and to the extent that, the judgment awards damages, including exemplary or punitive damages, that do not compensate a party for actual loss or harm suffered.”Footnote 39 This provision reflects, of course, a significant point of difference in legislative policy and judicial practice between the United States and many other jurisdictions around the world.
Articles 12 and 13 address, respectively, the documents required to be produced by the party seeking recognition and enforcement and the procedure to be followed by the courts of the requested State. Article 14 precludes the enforcing court from requiring the party seeking recognition or enforcement to post “security, bond or deposit … on the sole ground that such party is a foreign national or is not domiciled or resident” in the state where enforcement is sought.Footnote 40
Uniform Interpretation
In conformity with several other private international law conventions adopted by the Hague Conference,Footnote 41 Article 20 provides that “[i]n the interpretation of this Convention, regard shall be had to its international character and to the need to promote uniformity in its application.” Thus, the courts of one contracting state should take into consideration (although are not necessarily bound by) relevant decisions of the courts of other contracting states with respect to the meaning and effect of the Convention's provisions.
Uniform interpretation is also promoted by Article 21, which provides for review of the “operation” of the Convention at regular intervals—as has generally been the case with other Hague conventions.
Non-unitary States
Also in common with other recently concluded Hague conventions, special provision is made for the application of the Convention by “non-unified legal systems,” meaning contracting states “in which two or more systems of law apply in different territorial units.”Footnote 42 In general, references in the Convention to the law, procedure, or courts of a state are to be construed as referring, where appropriate, to the law, procedure, or courts of the relevant territorial unit, although “[a] court in a territorial unit of a Contracting State with two or more territorial units in which different systems of law apply shall not be bound to recognise or enforce a judgment from another Contracting State solely because the judgment has been recognised or enforced in another territorial unit of the same Contracting State under this Convention.”Footnote 43
The latter exception is unlikely to operate with respect to the United States, in light of the “Full Faith and Credit” clause of the U.S. Constitution and the fact that a very substantial degree of uniformity exists among the constituent states of the Union by virtue of the uniform laws applicable to the recognition and enforcement of foreign-country judgments.Footnote 44
Regional Economic Integration Organizations
The Convention follows recent Hague Conference practice by expressly recognizing that a “Regional Economic Integration Organisation” constituted solely by sovereign states may sign, accept, approve, or accede to the Convention if it has competence over “some or all of the matters governed by this Convention.”Footnote 45 Moreover, such an organization may claim exclusive competence over all matters governed by the Convention, so that its member states cannot be parties in their own right but will instead be bound by virtue of the organization's signature, acceptance, approval, or accession.Footnote 46
These provisions are intended to permit the European Union in particular to participate in the treaty regime since it has exclusive competence over matters addressed in the 2019 Judgments Convention. In the case of the 2005 Convention on Choice of Court Agreements, the EU became a party in its own right along with all of its member states.
Exclusion of Treaty Relations
In most multilateral treaties, a state party is bound, from the time that the agreement comes into force for it, by its obligations with regard to all other states parties. The 2019 Judgments Convention, however, embraced a somewhat unique (although not entirely unprecedented) mechanism that permits contracting states the option of excluding treaty relations with one or more other contracting states. To take advantage of this “bilateralization” provision, the contracting state in question need only notify the depositary (i.e., the Ministry of Foreign Affairs of the Netherlands) that “the ratification, acceptance, approval or accession of another State shall not have the effect of establishing relations between the two States pursuant to this Convention.”Footnote 47
This provision reflected a concern, driven by the prospect of widespread adherence to the Convention, that contracting states might be bound to recognize and enforce judgments from other states whose legal systems were considered likely to produce biased, unprincipled, or defective judgments. Rather than compromise on the mandatory nature of the recognition and enforcement obligations that lie at the heart of the Convention, or attempt to craft some standards by which requests from states to become party to the Convention could be judged, or encourage greater reliance on the public policy exception to the obligation to recognize and enforce judgments under Article 7(1)(c), the negotiators accepted this limited opt out mechanism as a point of compromise.Footnote 48
Under Article 29(4), a contracting state may withdraw a “no relations” notification at any time.
Declarations
Additional flexibility is provided by Article 30, which allows contracting states to utilize a fairly extensive system of declarations with respect to no less than eight substantive areas of the Convention.
This system permits contracting states, for example, to opt out of the prohibition against requiring any security, bond, or deposit in connection with an application for enforcement of a judgment under Article 14(1) and to refuse to recognize or enforce judgments given by courts of another contracting state with respect to parties who were resident in (and all other elements relevant to the dispute were connected only with) the requested state under Article 17. Under Article 19, they may declare that they will not apply the Convention to judgments arising from proceedings in which the state or a government agency of that state (or a natural person acting for that state or government agency) is a party. Where a state includes territorial (subnational) units with different systems of law, Article 25 permits it to declare that the Convention extends only to some of them.
Perhaps most significantly, Article 18 provides that a contracting state may by declaration exclude the Convention's application to “a specific matter” at to which it “has a strong interest in not applying” the Convention. No criteria are provided by which to determine whether a given interest is “strong,” although the declaring state is enjoined to “ensure that the declaration is no broader than necessary and that the specific matter excluded is clearly and precisely defined.”Footnote 49 This provision clearly provides an additional element of flexibility designed to encourage widespread adherence by states with differing legal systems. Whether it will prove in practice to work against the goal of uniformity in interpretation and application remains to be seen.
Contributions and Prospects
The 2019 Judgments Convention is detailed, complicated, and full of contingencies and compromises. Its ultimate success will depend both on the relative rapidity of ratifications and the willingness of domestic courts to interpret and implement its provisions in the broad pro-enforcement spirit in which they were adopted. It is far too early to predict whether the Convention will have as significant an impact as the New York Convention has had over the past sixty years.
Still, the new Convention seems in principle to offer real promise of a significant departure from the current regime in which the recognition and enforcement of foreign civil and commercial judgments remains largely subject to varying domestic rules and practices that on the whole do not readily give effect to judgments rendered by foreign courts. The Convention seeks to improve upon this state of affairs by enhancing legal certainty and predictability, reducing transactional and litigation costs in cross-border civil and commercial matters, and, ultimately, providing greater certainty in multilateral trade and investment.
Because the text of the Convention was adopted by all states that participated in its negotiation (as well as the European Union), and because adherence is not restricted to members of the Hague Conference, the Convention is likely to be brought into force quickly and to gain additional contracting states at a fairly rapid pace.
Prospects for speedy U.S. adherence are more difficult to judge. Because, on the whole, U.S. judgments receive less favorable treatment in foreign courts than foreign judgments do in U.S. courts, the regime created by the new Convention would seem to benefit U.S. judgment holders, even taking into account limitations such as the exclusion of non-compensatory (exemplary or punitive) damages. One could therefore expect support—perhaps even enthusiasm—from the U.S. business and legal communities.
However, the general process of treaty ratification in the United States has moved slowly in recent years, and depending on how the issue of domestic implementation of the Convention is approached, adherence could face some challenges. In the United States, the recognition and enforcement of foreign country judgments today remains primarily a matter of state law.Footnote 50 To be sure, U.S. courts frequently apply uniform state law, with a significant majority of states having adopted either the 1962 Uniform Foreign Money Judgments Recognition Act or the 2005 Uniform Foreign-Country Money Judgments Recognition Act.Footnote 51
Another difficult issue may be how to ensure consistent interpretation and application of the Convention throughout the U.S. judicial system, at the state as well as federal levels. As a duly ratified treaty, the Convention would become part of the Supreme Law of the Land.Footnote 52 Yet one could readily anticipate some resistance to allowing the Convention to “federalize” recognition and enforcement of foreign judgments. At the same time, placing the task of treaty interpretation and implementation solely in the hands of the state courts might open the door to discordant results and, in the worst case, possible inconsistencies with U.S. treaty obligations that the federal government would have limited or no ability to remedy. Some form of joint or coordinated implementation involving both the federal and state governments would seem a logical approach.
Similar federalism considerations have to date frustrated U.S. adherence to the 2005 Choice of Court Convention and led to a significant debate over the practicality of implementing that treaty (and other private international law instruments) on the basis of “cooperative federalism.”Footnote 53 Yet the problems are not insoluble. Both the 2005 Convention and the 2019 Judgments Convention have the clear potential to be beneficial to U.S. interests, including both those of the business and commercial communities and the federal and state judiciaries. One possibility would be to take up the domestic implementation of both instruments at the same time.