Legal certainty in international trade for EU businesses using choice of court agreements

SUMMARY OF:

Decision 2009/397/EC on the signing of the Convention on Choice of Court Agreements

Decision 2014/887/EU approving the Hague Convention on Choice of Court Agreements between parties to international transactions

WHAT IS THE AIM OF THE DECISIONS AND THE CONVENTION?

On behalf of the European Union (EU), they sign and approve the Hague Convention of 30 June 2005 on Choice of Court Agreements*.
The convention clarifies the rules governing international trade disputes, where the parties have chosen a court to be exclusively competent.
The convention brings more legal certainty for EU companies doing business with firms outside the EU by ensuring that their choice of a court to deal with a dispute is respected.

KEY POINTS

Scope of the convention

The convention applies to exclusive choice of court agreements in international civil and commercial matters involving countries which apply the convention.
A choice of court agreement is considered to be exclusive, unless otherwise specified by the parties.
Several issues are excluded. Examples of these include:
- consumer and employment contracts,
- the legal capacity of (natural) persons,
- the validity of legal persons and of intellectual property rights and family law matters,
- alternate dispute resolution * proceedings.
Moreover, the parties to the convention may exclude certain other issues from its scope of application. On that basis, the EU made a declaration that it will not apply the convention to certain insurance matters.

Ensuring the respect of the choice of the court

Will of the parties — the parties to a contract may conclude an exclusive choice of court agreement to designate the court of one of the countries applying the convention as competent to deal with a dispute. The agreement must be made in writing or by other means that allow the information to be subsequently accessed.
Court competence — the designated court is the only court that is competent to hear disputes covered by the choice of court agreement, unless it decides that the agreement is not valid under its national law. Any non-chosen court must suspend or dismiss proceedings brought in violation of the choice of court agreement, except where:
- the agreement is null and void under the law of the state of the chosen court;
- the party lacked the capacity to conclude the agreement under the national law of the court seized;
- implementation of the agreement contravenes the public policy of the state of the non-chosen court;
- the agreement cannot be performed; or
- the designated court decides against hearing the case.
Recognition and enforcement — the other states applying the convention must recognise and enforce a judgment given by the chosen court. However, they may postpone enforcement if the judgment is still under review in the state of origin or if the deadline for seeking ordinary review has not yet expired. The convention also sets out a number of other situations where recognition and enforcement may be refused (for instance, when a judgment was obtained by fraud). The text also lists the documents required to request recognition and enforcement.

FROM WHEN DOES THE CONVENTION APPLY?

Following Decision 2014/887/EU, the EU ratified the convention on 15 June 2015, making it binding for all EU countries (except Denmark) and the other countries that have ratified it from the moment of its entry into force on 1 December 2015.

BACKGROUND

The Choice of Court Convention was concluded under the auspices of the Hague Conference on Private International Law on 30 June 2005. The convention was signed by the EU in 2009. Parties to the convention include EU countries as well as countries outside the EU.
The EU’s internal rules on recognition and enforcement of judgments in civil and commercial cases (Regulation (EU) No 1215/2012) were reformed to ensure coherence with the convention.
For more information, see:
- ‘Choice of Court Convention: EU businesses receive a major boost for international trade’ — press release (European Commission)
- Civil and commercial matters (European Commission).

KEY TERMS

Choice of court agreement: agreement between parties to designate which court (one or more specific courts) is competent in disputes relating to a particular legal relationship.

Alternative dispute resolution: resolving disputes without going to court.

MAIN DOCUMENTS

Council Decision 2009/397/EC of 26 February 2009 on the signing on behalf of the European Community of the Convention on Choice of Court Agreements (OJ L 133, 29.5.2009, pp. 1-13).

Council Decision 2014/887/EU of 4 December 2014 on the approval, on behalf of the European Union, of the Hague Convention of 30 June 2005 on Choice of Court Agreements (OJ L 353, 10.12.2014, pp. 5-8).