EXPLANATORY MEMORANDUM

1.           CONTEXT OF THE PROPOSAL

1.1.        Purpose of the proposal

The Commission is proposing that the EU approves the 2005 Convention on Choice of Court Agreements. The Convention was signed by the Union on 1 April 2009 on the basis of the Council Decision 2009/397/EC[1].

The Action Plan implementing the Stockholm Programme announced the Commission's intention to propose approval of the Convention in 2012.

Having the EU approve the Convention would reduce legal uncertainty for EU companies trading outside the EU by ensuring that choice of court agreements included in their contracts are respected and that judgments issued by the courts designated in such agreements would be eligible for recognition and enforcement in the other Contracting Parties to the Convention.

Overall, approval of the Convention by the EU would complement the realisation of the aims underlying the EU rules on the prorogation of jurisdiction, by creating a harmonised set of rules within the EU in respect of third states which will become Contracting Parties to the Convention.

1.2.        The Hague Convention of 30 June 2005 on Choice of Court Agreements

The Convention on Choice of Court Agreements was concluded on 30 June 2005 under the auspices of the Hague Conference on Private International Law. It is designed to offer greater legal certainty and predictability for parties involved in business-to-business agreements and international litigation by creating an optional worldwide judicial dispute resolution mechanism alternative to the existing arbitration system.

In particular, the objective of the Convention is to promote international trade and investment through enhanced judicial cooperation by introducing uniform rules on jurisdiction based on exclusive choice of court agreements and on the recognition and enforcement of judgments given by the chosen courts in its Contracting Parties.

The Convention seeks to achieve a balance between (i) the need to guarantee to the parties that only the courts chosen by them will hear the case and that the resulting judgment will be recognised and enforced abroad, and (ii) the need to allow States to pursue some aspects of their public policy, related in particular to the protection of weaker parties, protection against serious unfairness in particular situations and guaranteed respect for some grounds of exclusive jurisdiction of States.

1.3.        How the Convention relates to the Brussels I Regulation

At EU level, international jurisdiction of the Union courts based on choice of court agreements is governed by the Council Regulation (EC) No 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (the Brussels I Regulation)[2] (to be replaced by Regulation (EU) No 1215/2012 of the European Parliament and of the Council on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Recast)[3] as of 10 January 2015). The Brussels I Regulation does not however govern the enforcement in the Union of choice of court agreements in favor of third State courts[4]. This would be achieved once the Convention on Choice of Court Agreements is approved by the Union.

The recent amendments to the Brussels I Regulation (the Brussels I Regulation (recast)) have strengthened party autonomy by ensuring that choice of court agreements may not be circumvented by parties seizing other courts in violation of such agreements. At the same time, these amendments ensure that the approach to choice of court agreements for intra-EU situations is consistent with the one that would apply to extra-EU situations under the Convention, once approved by the Union. The Brussels I Regulation (recast) thus prepares the ground for the EU to proceed with the approval of the Convention.

The relationship between the rules contained in the Convention and the existing and future EU rules is set out in Article 26(6) of the Convention as follows:

‘This Convention shall not affect the application of the rules of a Regional Economic Integration Organisation that is a Party to this Convention, whether adopted before or after this Convention

a) where none of the parties is resident in a Contracting State that is not a Member State of the Regional Economic Integration Organisation;

b) as concerns the recognition or enforcement of judgments as between Member States of the regional Economic Integration Organisation.’

Consequently, the Convention affects the application of the Brussels I Regulation if at least one of the parties is resident in a Contracting State to the Convention. The Convention will prevail over the jurisdiction rules of the Regulation except if both parties are EU residents or come from third states, not Contracting Parties to the Convention. With regard to the recognition and enforcement of judgments, the Regulation will prevail where the court that made the judgment and the court in which recognition and enforcement is sought are both located in the Union.

The Convention, once approved by the EU, will therefore reduce the scope of application of the the Brussels I Regulation. Nevertheless, this reduction of scope is acceptable in the light of the increase in the respect for party autonomy at international level and increased legal certainty for EU companies engaged in trade with third State parties.

1.4.        Benefits for European business

A choice of court agreement is a significant element in the negotiation of international contracts, as it ensures legal predictability in the event of a dispute. It is therefore an important element in the risk assessment for companies when engaging in international trade. The figures collected in the course of preparing of the Commission’s proposal on signature of the Convention and on the Brussels I Regulation (recast)[5] show the importance of choice of court agreements for EU business in their B2B relations.

The effectiveness of choice of court agreements within the EU is ensured through the Brussels I Regulation. Party autonomy needs to be ensured not only within the EU but also beyond the EUʼs borders. The Convention will give EU business the necessary legal certainty that their choice of court agreements in favour of a court outside the EU are respected in the EU, and that agreements in favour of a court in the EU are respected in third States. It will also ensure that EU businesses can be confident that a judgment given by the chosen court in the EU is eligible for recognition and enforcement in third states, Contracting Parties to the Convention, and vice versa.

The Commissionʼs impact assessment on conclusion of the Convention by the EU (SEC/2008/2389 final) concluded that approving the Convention could increase businessʼs propensity to include choice of court agreements in international contracts, because of the greater legal certainty. Overall, it may act as a stimulus to international trade.

The benefits to EU business that emerge from approval by the EU of the Convention will increase with the number of ratifications of the Convention in particular by the Unionʼs main commercial partners.

2.           RESULTS OF CONSULTATIONS WITH THE INTERESTED PARTIES AND IMPACT ASSESSMENTS

Before proposing the Council decision on the signature of the Convention, the Commission carried out in 2008 an impact assessment on conclusion of the Convention by the EU[6]. It found that conclusion of the Convention would be beneficial in terms of promoting legal certainty and predictability for European businesses in respect of third States.

The impact assessment suggested that, when approving the Convention, the EU might consider making declarations under Article 21 of the Convention excluding from its scope copyright and related rights (where validity of these rights is linked to the Member States) and insurance contracts (where the policyholder is domiciled in the EU and the risk or insured event, item or property is related exclusively to the EU). Given the impact on both industries and the fact that the views of the stakeholders have in the past been divided, the Commission further considered the need to make such declarations. Notably, its decision to propose the approval of the Convention with a declaration on the scope of the Convention was preceded by consultations with the Member States in the Council Working Party on Civil Law Matters (General Questions) on 28 May 2013 (for further information see point 3.2 below).

3.           LEGAL ELEMENTS OF THE PROPOSAL

3.1.        Union competence with respect to the Convention

The Convention makes it possible for a Regional Economic Integration Organisation, depending on the scope of the competencies over the subject matter of the Convention, to conclude the Convention together with its Member States or alone, with the consequence of binding its Member States (Articles 29-30). The relevant declaration can be made at the time of signing, acceptance, approval or accession to the Convention.

When the EU signed the Convention, it declared in accordance with Article 30 of the Convention that it exercises competence over all the matters governed by the Convention and that its Member States will not be Contracting Parties to the Convention, but will be bound by it by virtue of its conclusion by the EU. Therefore, there is no need for the EU to make a further declaration under Article 30 when it approves the Convention.

3.2.        Declarations under the Convention affecting its substantive scope

In the interests of flexibility and of maintaining its potentially broad appeal, the Convention makes it possible for the Contracting Parties to extend or reduce its substantive scope by making the relevant declarations (Articles 19-22). Declarations may be made upon signature or approval or at any time thereafter, and may be modified or withdrawn at any time. When signing the Convention, the Union made no declarations under these Articles. As mentioned above, the Commission carried out further consultations with the Member States in May-June 2013 on the need for such declarations. The results of the consultations are presented below.

3.2.1.     Declarations under Articles 19, 20 and 22

Article 19 permits a State to make a declaration by virtue of which its courts may refuse to determine disputes to which an exclusive choice of court agreement applies in cases which show no other connection with their State except for the choice of court. Article 20 permits a State to make a declaration that its courts may refuse to recognise or enforce a judgment given by a court of another Contracting State if the parties were resident in the requested State, and the relationship of the parties and all other elements relevant to the dispute, other than the location of the chosen court, were connected only with the requested State. Articles 19 and 20 thus permit to exclude from the scope of the Convention certain situations which, other than the choice of court, show no other international element.

Article 22 offers the possibility for a State to extend the scope of the Convention to cover non-exclusive choice of court agreements as far as the recognition and enforcement of judgments is concerned. Because of the reciprocity principle, the obligation to recognize and enforce judgments based on non-exclusive choice of court agreements extends only to judgments given by courts of other Contracting Parties that have themselves made Article 22 declarations.

With respect to Articles 19 and 20, it should be pointed out that Union law recognises choice of court agreements in situations where the choice of court is the only connection to the State of the chosen court. Union law does not require an additional connection to the chosen State besides the choice of court. There therefore seems no reason to exclude such situations from the scope of the Convention. This was confirmed in the consultations carried out by the Commission among Member States regarding possible declarations under Articles 19-20. The Commission therefore does not propose making declarations under these Articles.

With respect to Article 22, if the scope of the Convention were extended, the recognition and enforcement of judgments given on the basis of non-exclusive choice of court agreements would lead to the result that the courts of EU Member States in general could not take jurisdiction in situations where they would be seized by one of the parties after a judgment based on a non-exclusive choice of court agreement had already been given by the court of another Contracting Party which had made a declaration under Article 22. The Commission does not propose making the declaration under Article 22 when the Convention is approved. Given that the Article is based on reciprocity principle, the potential declaration could be possibly considered at a later stage once the interests of other Contracting Parties to the Convention in extending its scope under Article 22 have become evident. The views of the Member States which replied to the Commissionʼs consultation support in principle the Commissionʼs proposal to proceed without declaration at the moment.

3.2.2.     Declarations under Article 21

3.2.2.1.  The declarations in general

Article 2 of the Convention already provides for a number of exclusions from its scope. In addition, Article 21 allows the Contracting Party to extend the list of excluded matters by making a declaration specifying the matter that it intends to exclude. Consequently, the Convention would not apply with regard to that matter in the State making the declaration, and, because of reciprocity, other States would not apply the Convention to the matter in question where the chosen court is in the State which had made the declaration. Furthermore, the following conditions must be met for the declaration: there has to be a strong interest on the part of the declaring state in not applying the Convention to a specific matter; the declaration may not be broader than necessary and the specific matter excluded must be clearly and precisely defined[7].

The Commission’s impact assessment of 2008 suggested to give consideration to the Union making a declaration under Article 21 of the Convention and thereby exclude from its scope matters relating to insurance contracts - where the policyholder is domiciled in the EU and the risk or insured event, item or property is related exclusively to the EU – and to copyright and related rights where the validity of these rights is linked to a Member State. The aim of such declarations would be to protect the weaker party to an insurance contract (similar to the protection available under the Brussels I Regulation) and to a copyright contract from having to litigate in the chosen court which may have been imposed on them by a co-contractor in a stronger position, and, arguably, to ensure the application of certain standards on copyright and related rights established under EU law.

As mentioned earlier, the Commission has carried out further consultations with the Member States on the need for any declarations under Article 21, taking into account the policy with respect to choice of court agreements in Union law and bearing in mind that due to the reciprocity principle, the exclusion of a specific matter from the scope would mean that choice of court clauses in favor of Union courts which might benefit EU parties would not be enforced in third States Contracting Parties to the Convention. Taking into account the results of the consultation, the Commission proposes to limit the declaration under Article 21 to those matters where Union law equally limits party autonomy. This is the case, for matters falling with the scope of the Convention, only with respect to certain type of insurance contracts concluded for purposes which can be regarded as being within the trade or profession engaged in by the parties. Such a limited exclusion will ensure a coherent approach to choice of court within and outside the Union.

3.2.2.2.  The proposed declaration on insurance contracts

The Brussels I Regulation (Section 3) provides for special protective jurisdiction in matters of insurance aimed at protecting the weaker party (the policyholder, the insured party or a beneficiary) and the economic interests of the general public of the place where the weaker party is located. The insured party, as plaintiff, therefore has a choice of suing the insurer at several places, including the place where the insured party is domiciled; the insurer, as plaintiff, can sue the insured party in principle only where the latter is domiciled. These protective jurisdiction rules are based on the premise that the insured party is always the weaker party, even if he acts as a commercial operator in B2B relations. There is no change to this presumption in the Brussels I Regulation (recast). For this reason, the possibility of the parties concluding the choice of court agreement has been limited (Article 13 of the Regulation). The protective jurisdiction rules in Section 3, in cases against the insurer, apply only if the latter is domiciled or deemed to be domiciled (via branch, agency or establishment) in the EU. There is no change to this protective policy in the Brussels I Regulation (recast).

The Convention on its part applies to insurance matters without limiting party autonomy to conclude choice of court agreements. The only substantive limitation results from Article 2(1)(a) of the Convention which excludes insurance contracts entered into by private persons as consumers. This is partially contrary to the regime established in the Brussels I Regulation insofar as, for instance, the Convention would apply to insurance contracts concluded by SMEs. Once the Convention is approved by the EU, certain insurance contracts which now fall under the Brussels I Regulation, e.g. contracts between an EU policyholder and the EU branch of an insurer with headquarters outside the EU (Article 9(2) of the Regulation) would fall within the scope of the Convention (Article 26(6), in conjunction with Article 4(2) of the Convention). Therefore, if the Convention were to be concluded without excluding insurance contracts, there would be a lack of parallelism with the protective policy established in the Brussels I Regulation which allows the insured party to sue an EU insurer (or a EU branch of third State insurer) in his own place of domicile irrespective of any other jurisdiction available under a choice of court agreement. The downside of the complete exclusion of insurance contracts, from the point of view of European insurers, is that choice of court clauses they have negotiated with non-European policyholders would not be recognised and enforced in third States which are Contracting Parties to the Convention. From the perspective of the European policyholders, these would lose the advantage of having the decisions of EU courtsʼ (chosen by the parties) recognised and enforced outside the Union under the Convention. However, the advantages of having at external level the same regime protecting the interests of EU weaker parties as under EU internal legislation, out-weight these disadvantages.

The views of the Member States which replied to the Commission’s consultation on this matter were mixed with an almost equal numbers for and against excluding insurance contracts from the scope of the Convention. The Commission therefore proposes, following the impact assessment and in order to ensure consistency with EU internal protective legislation, to exclude certain type of insurance matters from the scope of the Convention without further conditions. Article 21 of the Convention requires any declaration to be formulated by subject matter only. As a result, any declaration under Article 21 could not be formulated in such a way that it would benefit unilaterally EU parties.

Articles 13 and 14 of the Brussels I Regulation do not limit party autonomy in insurance contracts in all cases. There are a number of exceptions in which parties are allowed to designate the court competent to hear their disputes. The proposed declaration is formulated in a way so as to allow as much as possible those choice of court agreements which are recognised in Union law to be equally recognised at the international level through the Choice of Court Convention. Nevertheless, in light of the formulation of the exceptions under Union law, which are designed to protect EU policy holders only, and the requirement of the Convention that the declaration should refer to subject matter only, it does not seem possible to ensure complete coherence between the Convention on the one hand and Union law on the other hand. In particular, Article 13(4) of the Brussels I Regulation recognises and enforces choice of court agreements concluded with policy holders domiciled outside the EU, unless the insurance is compulsory or relates to immoveable property in a Member State. As it is not possible, under the Convention, to distinguish between policy holders domiciled in and outside the Union, the Commission proposes not to mirror the exception of Article 13(4) in the declaration. This would have the effect that insurance contracts concluded by policyholders domiciled outside the Union would not be governed by the Convention and would remain governed by internal Union law. As a result, European companies concluding agreements with non-EU policyholders would be ensured to see their choice of court agreement upheld by Union courts on the basis of Article 13(4); European policyholders concluding agreements with non-EU insurance providers would still have access to the EU courts on the basis of Section 3 of Chapter II of the Brussels I Regulation.

Overall, the proposed declaration aims to ensure that:

· the carve-out is as small as is needed to achieve the goal of protecting the interests of weaker parties in insurance contracts as reflected in the protective jurisdiction rules of the Brussels I Regulation. The courts of the EU Member States will be allowed (on the basis of EU or national law, when applicable) to hear the insurance dispute despite a choice of court agreement in favour of the courts of a third State which is a Contracting Party to the Convention;

· it is consistent with the Convention. The declaration is based solely on the subject matter and is neutral;

· there is a parallelism with the Brussels I Regulation which, in its Articles 13 and 14, defines the situations when choice of court agreements are allowed in insurance contracts;

· both the excluded subject matter – insurance contracts – and the situations when the carve-out does not apply are clearly and precisely defined.

2014/0021 (NLE)

Proposal for a

COUNCIL DECISION

on the approval, on behalf of the European Union, of the Hague Convention of 30 June 2005 on Choice of Court Agreements

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 81(2), in conjunction with point (a) of the first subparagraph of Article 218(6) thereof,

Having regard to the proposal from the European Commission,

Having regard to the consent of the European Parliament[8],

Whereas:

(1)       The European Union is working towards the establishment of a common judicial area based on the principle of mutual recognition of judicial decisions.

(2)       The Convention on Choice of Court Agreements concluded on 30 June 2005 under the auspices of the Hague Conference on Private International Law (hereinafter referred to as the Convention) makes a valuable contribution to promoting party autonomy in international commercial transactions and increasing the predictability of judicial solutions in such transactions. In particular, the Convention ensures the necessary legal certainty for the parties that their choice of court agreement is respected and that a judgment given by the chosen court is eligible for recognition and enforcement in cross-border situations.

(3)       Article 29 of the Convention allows Regional Economic Organisations such us the European Union to sign, accept, approve or accede to the Convention. The Union signed the Convention on 1 April 2009, subject to the conclusion of the Convention at a later date, in accordance with Council Decision 2009/397/EC[9].

(4)       The Convention affects Union secondary legislation on jurisdiction based on choice by the parties and the recognition and enforcement of the resulting judgments, in particular Council Regulation (EC) 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters[10]. Regulation (EC) No 44/2001 is to be replaced as of 10 January 2015 by Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters[11].

(5)       Whereas Regulation (EU) No 1215/2012 prepared the ratification of the Convention by ensuring coherence between the Union rules on choice of court in civil and commercial matters and those of the Convention. It would therefore be appropriate for the Convention to enter into force in the Union on the same date of the entry into application of Regulation (EU) No 1215/2012.

(6)       When signing the Convention, the Union declared under Article 30 of the Convention that it exercises competence over all the matters governed by the Convention. Consequently, the Member States should be bound by the Convention by virtue of its approval by the Union.

(7)       Moreover, the Union, should, when approving the Convention, make the declaration allowed under Article 21 excluding from the scope of the Convention insurance contracts in general, subject to defined exceptions. The purpose of the declaration is to preserve the protective jurisdictional rules available to the policyholder, the insured party or a beneficiary in insurance contracts under Section 3 of Regulation (EC) 44/2001. The exclusion should be limited to whatever is necessary to protect the interests of the weaker parties in insurance contracts.

(8)       The United Kingdom and Ireland are bound by Council Regulation (EC) No 44/2001 and are therefore taking part in the adoption of this Decision.

(9)       In accordance with Articles 1 and 2 of Protocol (No 22) on the position of Denmark, annexed to the Treaty on European Union and to the Treaty on the Functioning of the European Union, Denmark is not taking part in the adoption of this decision and is not bound by it or subject to its application,

HAS ADOPTED THIS DECISION:

Article 1

The Hague Convention of 30 June 2005 on Choice of Court Agreements (̒the Conventionʼ) is hereby approved on behalf of the European Union.

The text of the Convention is attached to this Decision as Annex I.

Article 2

The President of the Council shall designate the person empowered to proceed, on behalf of the European Union, to deposit the instrument referred to in Article 27(4) of the Convention in order to express the consent of the European Union to be bound by the Agreement.

Article 3

When depositing the instrument referred to in Article 27(4) of the Convention, the Union shall make the declaration provided in Article 21 concerning insurance contracts.

The text of that declaration is attached as Annex II.

Article 4

This Decision shall enter into force on the day of its adoption.

Done at Brussels,

                                                                       For the Council

                                                                       The President

[1]               OJ L 133, 29.5.2009, p. 1.

[2]               OJ L 12, 16.1.2001, p. 1.

[3]               OJ L 351, 20.12.2012, p. 1.

[4]               Enforcement in the Union of choice of court agreements in favour of Switzerland, Iceland and Norway courts is governed by the 2007 Lugano Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters.

[5]               Commission staff working paper accompanying the proposal for a Council Decision on the signing by the European Community of the Convention on Choice of Court Agreements, SEC(2008) 2389 of 5 9 2008 and Impact Assessment accompanying the Commission’s proposal for the Brussels I Regulation (recast), SEC (2010) 1547 final of 14 12 2010.

[6]               Referred to in footnote 5.

[7]               As further explained in the Explanatory Report to the Convention: ‘it was intended by the Diplomatic Session that this provision should apply only to discrete areas of law of the kind excluded by Article 2(2). The declaration cannot use any criterion other than subject matter. It could, for example, exclude ‘contracts of marine insurance’, but not ‘contracts of marine insurance where the chosen court is situated in another State’’ (paragraph 235). Thus, the only criterion permitted is that of subject matter.

[8]               OJ C , , p. .

[9]               OJ L 133, 29.5.2009, p. 1.

[10]             OJ L 12, 16.1.2001, p. 1.

[11]             OJ L 351, 20.12.2012, p. 1.

ANNEX 1

CONVENTION ON CHOICE OF COURT AGREEMENTS

The States Parties to the present Convention,

Desiring to promote international trade and investment through enhanced judicial cooperation,

Believing that such cooperation can be enhanced by uniform rules on jurisdiction and on recognition and enforcement of foreign judgments in civil or commercial matters,

Believing that such enhanced cooperation requires in particular an international legal regime that provides certainty and ensures the effectiveness of exclusive choice of court agreements between parties to commercial transactions and that governs the recognition and enforcement of judgments resulting from proceedings based on such agreements,

Have resolved to conclude this Convention and have agreed upon the following provisions:

CHAPTER I

SCOPE AND DEFINITIONS

Article 1

Scope

1. This Convention shall apply in international cases to exclusive choice of court agreements concluded in civil or commercial matters.

2. For the purposes of Chapter II, a case is international unless the parties are resident in the same Contracting State and the relationship of the parties and all other elements relevant to the dispute, regardless of the location of the chosen court, are connected only with that State.

3. For the purposes of Chapter III, a case is international where recognition or enforcement of a foreign judgment is sought.

Article 2

Exclusions from scope

1. This Convention shall not apply to exclusive choice of court agreements:

(a) to which a natural person acting primarily for personal, family or household purposes (a consumer) is a party;

(b) relating to contracts of employment, including collective agreements.

2. This Convention shall not apply to the following matters:

(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 and analogous matters;

(f) the carriage of passengers and goods;

(g) marine pollution, limitation of liability for maritime claims, general average, and emergency towage and salvage;

(h) anti-trust (competition) matters;

(i) liability for nuclear damage;

(j) claims for personal injury brought by or on behalf of natural persons;

(k) tort or delict claims for damage to tangible property that do not arise from a contractual relationship;

(l) rights in rem in immovable property, and tenancies of immovable property;

(m) the validity, nullity, or dissolution of legal persons, and the validity of decisions of their organs;

(n) the validity of intellectual property rights other than copyright and related rights;

(o) infringement of intellectual property rights other than copyright and related rights, except where infringement proceedings are brought for breach of a contract between the parties relating to such rights, or could have been brought for breach of that contract;

(p) the validity of entries in public registers.

3. Notwithstanding paragraph 2, proceedings are not excluded from the scope of this Convention where a matter excluded under that paragraph arises merely as a preliminary question and not as an object of the proceedings. In particular, the mere fact that a matter excluded under paragraph 2 arises by way of defence does not exclude proceedings from the Convention, if that matter is not an object of the proceedings.

4. This Convention shall not apply to arbitration and related proceedings.

5. Proceedings are not excluded from the scope of this Convention by the mere fact that a State, including a government, a governmental agency or any person acting for a State, is a party thereto.

6. Nothing in this Convention shall affect privileges and immunities of States or of international organisations, in respect of themselves and of their property.

Article 3

Exclusive choice of court agreements

For the purposes of this Convention:

(a) ‘exclusive choice of court agreement’ means an agreement concluded by two or more parties that meets the requirements of paragraph (c) and designates, for the purpose of deciding disputes which have arisen or may arise in connection with a particular legal relationship, the courts of one Contracting State or one or more specific courts of one Contracting State to the exclusion of the jurisdiction of any other courts;

(b) a choice of court agreement which designates the courts of one Contracting State or one or more specific courts of one Contracting State shall be deemed to be exclusive unless the parties have expressly provided otherwise;

(c) an exclusive choice of court agreement must be concluded or documented:

(i) in writing; or

(ii) by any other means of communication which renders information accessible so as to be usable for subsequent reference;

(d) an exclusive choice of court agreement that forms part of a contract shall be treated as an agreement independent of the other terms of the contract. The validity of the exclusive choice of court agreement cannot be contested solely on the ground that the contract is not valid.

Article 4

Other definitions

1. In this Convention, ‘judgment’ means any decision on the merits given by a court, whatever it may be called, including a decree or order, and a determination of costs or expenses 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.

2. For the purposes of this Convention, an entity or person other than a natural person shall be considered to be resident in the State:

(a) where it has its statutory seat;

(b) under whose law it was incorporated or formed;

(c) where it has its central administration; or

(d) where it has its principal place of business.

CHAPTER II

JURISDICTION

Article 5

Jurisdiction of the chosen court

1. The court or courts of a Contracting State designated in an exclusive choice of court agreement shall have jurisdiction to decide a dispute to which the agreement applies, unless the agreement is null and void under the law of that State.

2. A court that has jurisdiction under paragraph 1 shall not decline to exercise jurisdiction on the ground that the dispute should be decided in a court of another State.

3. The preceding paragraphs shall not affect rules:

(a) on jurisdiction related to subject matter or to the value of the claim;

(b) on the internal allocation of jurisdiction among the courts of a Contracting State. However, where the chosen court has discretion as to whether to transfer a case, due consideration should be given to the choice of the parties.

Article 6

Obligations of a court not chosen

A court of a Contracting State other than that of the chosen court shall suspend or dismiss proceedings to which an exclusive choice of court agreement applies unless:

(a) the agreement is null and void under the law of the State of the chosen court;

(b) a party lacked the capacity to conclude the agreement under the law of the State of the court seised;

(c) giving effect to the agreement would lead to a manifest injustice or would be manifestly contrary to the public policy of the State of the court seised;

(d) for exceptional reasons beyond the control of the parties, the agreement cannot reasonably be performed; or

(e) the chosen court has decided not to hear the case.

Article 7

Interim measures of protection

Interim measures of protection are not governed by this Convention. This Convention neither requires nor precludes the grant, refusal or termination of interim measures of protection by a court of a Contracting State and does not affect whether or not a party may request or a court should grant, refuse or terminate such measures.

CHAPTER III

RECOGNITION AND ENFORCEMENT

Article 8

Recognition and enforcement

1. A judgment given by a court of a Contracting State designated in an exclusive choice of court agreement shall be recognised and enforced in other Contracting States in accordance with this Chapter. Recognition or enforcement may be refused only on the grounds specified in this Convention.

2. Without prejudice to such review as is necessary for the application of the provisions of this Chapter, there shall be no review of the merits of the judgment given by the court of origin. The court addressed shall be bound by the findings of fact on which the court of origin based its jurisdiction, unless the judgment was given by default.

3. A judgment shall be recognised only if it has effect in the State of origin, and shall be enforced only if it is enforceable in the State of origin.

4. Recognition or enforcement may be postponed or refused if the judgment is the subject of review in the State of origin or if the time limit for seeking ordinary review has not expired. A refusal does not prevent a subsequent application for recognition or enforcement of the judgment.

5. This Article shall also apply to a judgment given by a court of a Contracting State pursuant to a transfer of the case from the chosen court in that Contracting State as permitted by Article 5(3). However, where the chosen court had discretion as to whether to transfer the case to another court, recognition or enforcement of the judgment may be refused against a party who objected to the transfer in a timely manner in the State of origin.

Article 9

Refusal of recognition or enforcement

Recognition or enforcement may be refused if:

(a) the agreement was null and void under the law of the State of the chosen court, unless the chosen court has determined that the agreement is valid;

(b) a party lacked the capacity to conclude the agreement under the law of the requested State;

(c) the document which instituted the proceedings or an equivalent document, including the essential elements of the claim:

(i) was not notified to the defendant in sufficient time and in such a way as to enable him to arrange for his defence, unless the defendant entered an appearance and presented his case without contesting notification in the court of origin, provided that the law of the State of origin permitted notification to be contested; or

(ii) 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;

(d) the judgment was obtained by fraud in connection with a matter of procedure;

(e) recognition or enforcement would be manifestly incompatible with the public policy of the requested State, including situations where the specific proceedings leading to the judgment were incompatible with fundamental principles of procedural fairness of that State;

(f) the judgment is inconsistent with a judgment given in the requested State in a dispute between the same parties; or

(g) the judgment is inconsistent with an earlier judgment given in another State between the same parties on the same cause of action, provided that the earlier judgment fulfils the conditions necessary for its recognition in the requested State.

Article 10

Preliminary questions

1. Where a matter excluded under Article 2(2), or under Article 21, arose as a preliminary question, the ruling on that question shall not be recognised or enforced under this Convention.

2. Recognition or enforcement of a judgment may be refused if, and to the extent that, the judgment was based on a ruling on a matter excluded under Article 2(2).

3. However, in the case of a ruling on the validity of an intellectual property right other than copyright or a related right, recognition or enforcement of a judgment may be refused or postponed under the preceding paragraph only where:

(a) that ruling is inconsistent with a judgment or a decision of a competent authority on that matter given in the State under the law of which the intellectual property right arose; or

(b) proceedings concerning the validity of the intellectual property right are pending in that State.

4. Recognition or enforcement of a judgment may be refused if, and to the extent that, the judgment was based on a ruling on a matter excluded pursuant to a declaration made by the requested State under Article 21.

Article 11

Damages

1. Recognition or enforcement of a judgment may be refused 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.

2. The court addressed shall take into account whether and to what extent the damages awarded by the court of origin serve to cover costs and expenses relating to the proceedings.

Article 12

Judicial settlements (transactions judiciaires)

Judicial settlements (transactions judiciaires) which a court of a Contracting State designated in an exclusive choice of court agreement has approved, or which have been concluded before that court in the course of proceedings, and which are enforceable in the same manner as a judgment in the State of origin, shall be enforced under this Convention in the same manner as a judgment.

Article 13

Documents to be produced

1. The party seeking recognition or applying for enforcement shall produce:

(a) a complete and certified copy of the judgment;

(b) the exclusive choice of court agreement, a certified copy thereof, or other evidence of its existence;

(c) if the judgment was given by default, the original or a certified copy of a document establishing that the document which instituted the proceedings or an equivalent document was notified to the defaulting party;

(d) any documents necessary to establish that the judgment has effect or, where applicable, is enforceable in the State of origin;

(e) in the case referred to in Article 12, a certificate of a court of the State of origin that the judicial settlement or a part of it is enforceable in the same manner as a judgment in the State of origin.

2. If the terms of the judgment do not permit the court addressed to verify whether the conditions of this Chapter have been complied with, that court may require any necessary documents.

3. An application for recognition or enforcement may be accompanied by a document, issued by a court (including an officer of the court) of the State of origin, in the form recommended and published by the Hague Conference on Private International Law.

4. If the documents referred to in this Article are not in an official language of the requested State, they shall be accompanied by a certified translation into an official language, unless the law of the requested State provides otherwise.

Article 14

Procedure

The procedure for recognition, declaration of enforceability or registration for enforcement, and the enforcement of the judgment, are governed by the law of the requested State unless this Convention provides otherwise. The court addressed shall act expeditiously.

Article 15

Severability

Recognition or enforcement of a severable part of a judgment shall be granted where recognition or enforcement of that part is applied for, or only part of the judgment is capable of being recognised or enforced under this Convention.

CHAPTER IV

GENERAL CLAUSES

Article 16

Transitional provisions

1. This Convention shall apply to exclusive choice of court agreements concluded after its entry into force for the State of the chosen court.

2. This Convention shall not apply to proceedings instituted before its entry into force for the State of the court seised.

Article 17

Contracts of insurance and reinsurance

1. Proceedings under a contract of insurance or reinsurance are not excluded from the scope of this Convention on the ground that the contract of insurance or reinsurance relates to a matter to which this Convention does not apply.

2. Recognition and enforcement of a judgment in respect of liability under the terms of a contract of insurance or reinsurance may not be limited or refused on the ground that the liability under that contract includes liability to indemnify the insured or reinsured in respect of:

(a) a matter to which this Convention does not apply; or

(b) an award of damages to which Article 11 might apply.

Article 18

No legalisation

All documents forwarded or delivered under this Convention shall be exempt from legalisation or any analogous formality, including an Apostille.

Article 19

Declarations limiting jurisdiction

A State may declare that its courts may refuse to determine disputes to which an exclusive choice of court agreement applies if, except for the location of the chosen court, there is no connection between that State and the parties or the dispute.

Article 20

Declarations limiting recognition and enforcement

A State may declare that its courts may refuse to recognise or enforce a judgment given by a court of another Contracting State if the parties were resident in the requested State, and the relationship of the parties and all other elements relevant to the dispute, other than the location of the chosen court, were connected only with the requested State.

Article 21

Declarations with respect to specific matters

1. Where a State has a strong interest in not applying this Convention to a specific matter, that State may declare that it will not apply the Convention to that matter. The State making such a declaration shall ensure that the declaration is no broader than necessary and that the specific matter excluded is clearly and precisely defined.

2. With regard to that matter, the Convention shall not apply:

(a) in the Contracting State that made the declaration;

(b) in other Contracting States, where an exclusive choice of court agreement designates the courts, or one or more specific courts, of the State that made the declaration.

Article 22

Reciprocal declarations on non-exclusive choice of court agreements

1. A Contracting State may declare that its courts will recognise and enforce judgments given by courts of other Contracting States designated in a choice of court agreement concluded by two or more parties that meets the requirements of Article 3(c), and designates, for the purpose of deciding disputes which have arisen or may arise in connection with a particular legal relationship, a court or courts of one or more Contracting States (a non-exclusive choice of court agreement).

2. Where recognition or enforcement of a judgment given in a Contracting State that has made such a declaration is sought in another Contracting State that has made such a declaration, the judgment shall be recognised and enforced under this Convention, if:

(a) the court of origin was designated in a non-exclusive choice of court agreement;

(b) there exists neither a judgment given by any other court before which proceedings could be brought in accordance with the non-exclusive choice of court agreement, nor a proceeding pending between the same parties in any other such court on the same cause of action; and

(c) the court of origin was the court first seised.

Article 23

Uniform interpretation

In the interpretation of this Convention, regard shall be had to its international character and to the need to promote uniformity in its application.

Article 24

Review of operation of the Convention

The Secretary General of the Hague Conference on Private International Law shall at regular intervals make arrangements for:

(a) review of the operation of this Convention, including any declarations; and

(b) consideration of whether any amendments to this Convention are desirable.

Article 25

Non-unified legal systems

1. In relation to a Contracting State in which two or more systems of law apply in different territorial units with regard to any matter dealt with in this Convention:

(a) any reference to the law or procedure of a State shall be construed as referring, where appropriate, to the law or procedure in force in the relevant territorial unit;

(b) any reference to residence in a State shall be construed as referring, where appropriate, to residence in the relevant territorial unit;

(c) any reference to the court or courts of a State shall be construed as referring, where appropriate, to the court or courts in the relevant territorial unit;

(d) any reference to a connection with a State shall be construed as referring, where appropriate, to a connection with the relevant territorial unit.

2. Notwithstanding the preceding paragraph, a Contracting State with two or more territorial units in which different systems of law apply shall not be bound to apply this Convention to situations which involve solely such different territorial units.

3. 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.

4. This Article shall not apply to a Regional Economic Integration Organisation.

Article 26

Relationship with other international instruments

1. This Convention shall be interpreted so far as possible to be compatible with other treaties in force for Contracting States, whether concluded before or after this Convention.

2. This Convention shall not affect the application by a Contracting State of a treaty, whether concluded before or after this Convention, in cases where none of the parties is resident in a Contracting State that is not a Party to the treaty.

3. This Convention shall not affect the application by a Contracting State of a treaty that was concluded before this Convention entered into force for that Contracting State, if applying this Convention would be inconsistent with the obligations of that Contracting State to any non-Contracting State. This paragraph shall also apply to treaties that revise or replace a treaty concluded before this Convention entered into force for that Contracting State, except to the extent that the revision or replacement creates new inconsistencies with this Convention.

4. This Convention shall not affect the application by a Contracting State of a treaty, whether concluded before or after this Convention, for the purposes of obtaining recognition or enforcement of a judgment given by a court of a Contracting State that is also a Party to that treaty. However, the judgment shall not be recognised or enforced to a lesser extent than under this Convention.

5. This Convention shall not affect the application by a Contracting State of a treaty which, in relation to a specific matter, governs jurisdiction or the recognition or enforcement of judgments, even if concluded after this Convention and even if all States concerned are Parties to this Convention.

This paragraph shall apply only if the Contracting State has made a declaration in respect of the treaty under this paragraph. In the case of such a declaration, other Contracting States shall not be obliged to apply this Convention to that specific matter to the extent of any inconsistency, where an exclusive choice of court agreement designates the courts, or one or more specific courts, of the Contracting State that made the declaration.

6. This Convention shall not affect the application of the rules of a Regional Economic Integration Organisation that is a Party to this Convention, whether adopted before or after this Convention:

(a) where none of the parties is resident in a Contracting State that is not a Member State of the Regional Economic Integration Organisation;

(b) as concerns the recognition or enforcement of judgments as between Member States of the Regional Economic Integration Organisation.

CHAPTER V

FINAL CLAUSES

Article 27

Signature, ratification, acceptance, approval or accession

1. This Convention is open for signature by all States.

2. This Convention is subject to ratification, acceptance or approval by the signatory States.

3. This Convention is open for accession by all States.

4. Instruments of ratification, acceptance, approval or accession shall be deposited with the Ministry of Foreign Affairs of the Kingdom of the Netherlands, depositary of the Convention.

Article 28

Declarations with respect to non-unified legal systems

1. If a State has two or more territorial units in which different systems of law apply in relation to matters dealt with in this Convention, it may at the time of signature, ratification, acceptance, approval or accession declare that the Convention shall extend to all its territorial units or only to one or more of them and may modify this declaration by submitting another declaration at any time.

2. A declaration shall be notified to the depositary and shall state expressly the territorial units to which the Convention applies.

3. If a State makes no declaration under this Article, the Convention shall extend to all territorial units of that State.

4. This Article shall not apply to a Regional Economic Integration Organisation.

Article 29

Regional Economic Integration Organisations

1. A Regional Economic Integration Organisation which is constituted solely by sovereign States and has competence over some or all of the matters governed by this Convention may similarly sign, accept, approve or accede to this Convention. The Regional Economic Integration Organisation shall in that case have the rights and obligations of a Contracting State, to the extent that the Organisation has competence over matters governed by this Convention.

2. The Regional Economic Integration Organisation shall, at the time of signature, acceptance, approval or accession, notify the depositary in writing of the matters governed by this Convention in respect of which competence has been transferred to that Organisation by its Member States. The Organisation shall promptly notify the depositary in writing of any changes to its competence as specified in the most recent notice given under this paragraph.

3. For the purposes of the entry into force of this Convention, any instrument deposited by a Regional Economic Integration Organisation shall not be counted unless the Regional Economic Integration Organisation declares in accordance with Article 30 that its Member States will not be Parties to this Convention.

4. Any reference to a ‘Contracting State’ or ‘State’ in this Convention shall apply equally, where appropriate, to a Regional Economic Integration Organisation that is a Party to it.

Article 30

Accession by a Regional Economic Integration Organisation without its Member States

1. At the time of signature, acceptance, approval or accession, a Regional Economic Integration Organisation may declare that it exercises competence over all the matters governed by this Convention and that its Member States will not be Parties to this Convention but shall be bound by virtue of the signature, acceptance, approval or accession of the Organisation.

2. In the event that a declaration is made by a Regional Economic Integration Organisation in accordance with paragraph 1, any reference to a ‘Contracting State’ or ‘State’ in this Convention shall apply equally, where appropriate, to the Member States of the Organisation.

Article 31

Entry into force

1. This Convention shall enter into force on the first day of the month following the expiration of three months after the deposit of the second instrument of ratification, acceptance, approval or accession referred to in Article 27.

2. Thereafter this Convention shall enter into force:

(a) for each State or Regional Economic Integration Organisation subsequently ratifying, accepting, approving or acceding to it, on the first day of the month following the expiration of three months after the deposit of its instrument of ratification, acceptance, approval or accession;

(b) for a territorial unit to which this Convention has been extended in accordance with Article 28(1), on the first day of the month following the expiration of three months after the notification of the declaration referred to in that Article.

Article 32

Declarations

1. Declarations referred to in Articles 19, 20, 21, 22 and 26 may be made upon signature, ratification, acceptance, approval or accession or at any time thereafter, and may be modified or withdrawn at any time.

2. Declarations, modifications and withdrawals shall be notified to the depositary.

3. A declaration made at the time of signature, ratification, acceptance, approval or accession shall take effect simultaneously with the entry into force of this Convention for the State concerned.

4. A declaration made at a subsequent time, and any modification or withdrawal of a declaration, shall take effect on the first day of the month following the expiration of three months after the date on which the notification is received by the depositary.

5. A declaration under Articles 19, 20, 21 and 26 shall not apply to exclusive choice of court agreements concluded before it takes effect.

Article 33

Denunciation

1. This Convention may be denounced by notification in writing to the depositary. The denunciation may be limited to certain territorial units of a non-unified legal system to which this Convention applies.

2. The denunciation shall take effect on the first day of the month following the expiration of 12 months after the date on which the notification is received by the depositary. Where a longer period for the denunciation to take effect is specified in the notification, the denunciation shall take effect upon the expiration of such longer period after the date on which the notification is received by the depositary.

Article 34

Notifications by the depositary

The depositary shall notify the Members of the Hague Conference on Private International Law, and other States and Regional Economic Integration Organisations which have signed, ratified, accepted, approved or acceded in accordance with Articles 27, 29 and 30 of the following:

(a) the signatures, ratifications, acceptances, approvals and accessions referred to in Articles 27, 29 and 30;

(b) the date on which this Convention enters into force in accordance with Article 31;

(c) the notifications, declarations, modifications and withdrawals of declarations referred to in Articles 19, 20, 21, 22, 26, 28, 29 and 30;

(d) the denunciations referred to in Article 33.

In witness whereof the undersigned, being duly authorised thereto, have signed this Convention.

Done at The Hague, on 30 June 2005, in the English and French languages, both texts being equally authentic, in a single copy which shall be deposited in the archives of the Government of the Kingdom of the Netherlands, and of which a certified copy shall be sent, through diplomatic channels, to each of the Member States of the Hague Conference on Private International Law as of the date of its Twentieth Session and to each State which participated in that Session.

ANNEX II

Declaration by the Union in accordance with Article 21 of the Convention on Choice of Court Agreements

1. The European Union hereby declares under Article 21 of the Convention that, except as provided below, it will not apply the Convention to insurance contracts.

2. This declaration shall not apply where:

(a) the choice of court agreement is entered into after a dispute has arisen, or

(b) without prejudice to Article 1, paragraph 2 of the Convention, the choice of court agreement is concluded between a policyholder and an insurer, both of whom are at the time of conclusion of the contract domiciled or habitually resident in the same State and which has the effect of conferring jurisdiction on the courts of that State even if the harmful event were to occur abroad, provided that such an agreement is not contrary to the law of that State, or

(c) the choice of court agreement relates to a contract of insurance in so far as it covers one or more of large risks as specified in paragraph 3.

3. Large risks referred to in point (c) of paragraph 2 include transport (aircraft, ships, rail and goods in transit), credit and suretyship, as well as other risks where the policyholder carries on a business of a certain size, as set out in paragraph 4.

4. The following are the risks referred to in paragraph 3:

(2) any loss of or damage to:

(a) seagoing ships, installations situated offshore or on the high seas, or aircraft, arising from perils which relate to their use for commercial purposes;

(b) goods in transit, other than passengers' baggage, where the transit consists of or includes carriage by such ships or aircraft;

(3) any liability, other than for bodily injury to passengers or loss of or damage to their baggage:

(a) arising out of the use or operation of ships, installations or aircraft as referred to in point 1(a) insofar as, in respect of the latter, the law of the State bound by this Convention in which such aircraft are registered does not prohibit agreements on jurisdiction regarding insurance of such risks;

(b) for loss or damage caused by goods in transit as described in point 1(b);

(4) any financial loss connected with the use or operation of ships, installations or aircraft as referred to in point 1(a), in particular loss of freight or charter-hire;

(5) any risk or interest connected with any of those referred to in points 1 to 3;

(6) notwithstanding points 1 to 4, all following large risks:

(a) a damage to or loss of railway rolling stock;

(b) a damage to or loss of aircraft;

(c) a damage to or loss of river and canal vessels, lake vessels, sea vessels;

(d) a damage to or loss of goods in transit or baggage, irrespective of the form of transport;

(e) a liability arising out of the use of aircraft (including carrier’s liability);

(f) a liability arising out of the use of ships, vessels or boats on the sea, lakes, rivers or canals (including carrier’s liability);

(g) any credit or suretyship risk where the policy holder is engaged professionally in an industrial or commercial activity or in one of the liberal professions and the risk relates to such activity;

(h) in case of a policy holder that carries on a business of a certain size:

· any loss or damage to land vehicles (including motor vehicles);

· any loss of or damage to property due to fire, explosion, natural forces (including storm), nuclear energy, land subsidence, hail, frost or theft;

· any liability arising out of the use of motor vehicles operating on the land (including carrier’s liability);

· any miscellaneous financial loss deriving from employment risks, insufficiency of income (general), bad weather, loss of benefits, continuing general expenses, unforeseen trading expenses, loss of market value, loss of rent or revenue, other indirect trading loss, other non-trading financial loss or other forms of financial loss.

5. For the purposes of point 5(h), the policy holder that carries on a business of a certain size means the policyholder that exceeds the limits of at least two of the following criteria:

· a balance-sheet total of EUR 6,2 million;

· a net turnover of EUR 12,8 million;

· an average number of 250 employees during the financial year.