Choice of court agreements between parties to international transactions

European Union (EU) companies involved in international legal transactions need to be certain that their choice of court agreement will be respected and that a judgment handed out by that court will be recognised internationally.

ACT

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.

SUMMARY

WHAT DOES THE CONVENTION DO?

It governs the recognition and enforcement of judgments in disputes arising from commercial transactions in which the parties to such transactions have conferred exclusive jurisdiction to a court of their choice. Parties to the Convention include states both within and outside the EU.

The Convention on Choice of Court Agreements was concluded under the auspices of the Hague Conference on Private International Law on 30 June 2005.

KEY POINTS

The Convention applies to exclusive choice of court agreements in international civil and commercial matters but excludes several issues including:

• consumer and employment contracts;
• the legal capacity of natural persons;
• family law matters;
• the validity of legal persons and of intellectual property rights;
• arbitration and other alternative dispute resolution proceedings.

An exclusive choice of court agreement may be concluded by two or more parties to designate which courts (one or more specific courts) of one contracting state are competent in disputes relating to a particular legal relationship. The agreement is considered exclusive unless otherwise specified by the parties involved.

The designated court is the only court with jurisdiction to hear disputes covered by the choice of court agreement, unless it decides that the agreement is not valid under its national law. Any other court of a contracting state (non-chosen court) must suspend or dismiss proceedings brought in violation of the choice of court agreement except:

• where, under the law of the state of the designated court, the agreement is null and void;
• where, under the law of the state of the other party, that party could not legally conclude the agreement;
• where 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.

Other contracting states must recognise and enforce an enforceable judgment of the designated court.

Where the judgment is under review or the period for review has not expired, enforcement by the other contracting states may be postponed. The Convention also sets out a number of other situations where recognition and enforcement may be refused. Conversely, the text also lists the documents required to request recognition and enforcement.

The Convention allows contracting parties to exclude certain issues from the Convention. When the EU formally gave its consent, it made a declaration that it will not apply the Convention to certain insurance matters.

The Convention was signed by the EU in 2009 and ratified on 11 June 2015. All EU countries (except Denmark) are consequently bound by the Convention.

The EU’s internal rules on recognition and enforcement of judgments in civil and commercial cases were reformed in Regulation (EU) No 1215/2012 (Brussels I) to ensure coherence with the Convention.

For more information, see:

• European Commission Press Release on the Choice of Court Convention;
• European Commission Civil Justice Homepage

RELATED ACT

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 (OJ L 351, 20.12.2012, pp. 1-32).

last update 13.05.2015