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

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 resolution² 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.