HCCH aBridged 2021 - Keynote speech - Prof Dr Trevor C Hartley

Hopefully, yes, you have the screen. Thank you very much. Thank you very much. I must say I'm very pleased when you invited me to give a talk about this because I always like talking about the Tricycle Convention. I spent quite a few years of my life coming to The Hague every summer to deal with it. I'm just going to try to give you a general and basic picture. The history of it is quite interesting because it didn't start off as a choice of court convention. It started off, the idea came from a very distinguished American professor, Arthur von Meeren of Harvard. He had the idea of having a worldwide jurisdiction and judgments convention which would deal with jurisdiction of courts and recognition of judgments. I think the US was primarily interested in recognition of judgments because America has quite a liberal and generous regime for recognizing foreign judgments, much more liberal in general and generous than most other countries. So the Americans wanted to somehow even up the system. Anyway, the negotiation started in 1996, a long time before the final product was delivered. We used to go to The Hague every summer which was rather nice actually because The Hague is a nice place. Initially, it was the member states of the European Union and the other countries that were represented. But at a certain point, it was decided that the European Union has exclusive treaty-making power with regard to the convention. That's why the European Union is a party and not the member states except for Denmark, which I'll talk about in a moment. The member states, their delegates, so went along. But we had to get up very early every morning, which was quite a strain for some of us, for what's called a coordination meeting. We all went along, this was all the European Union member states, to have a meeting and decide on common policy. And then after that, we had to follow the common line and we weren't allowed to say anything different. Anyway, that worked and quite a bit of progress was made. The problem was that the European Union, I mean, the two most important groups were the European Union and the United States. But later on, China became a major player as well and lots of other countries. The problem was that the European Union and the United States were really arguing for different things. The European Union felt that European judgments were almost all recognised in America, recognised in force anyway. So what did they need a convention for? They thought what they wanted was to cut down American jurisdiction, even in cases in which there was no question of recognising and enforcing the judgment. Certainly many European lawyers feel America has exceptionally wide jurisdiction. If you actually look at the rules in detail, I don't think that's true, but that's what they thought. So the Europeans were trying to cut down on American jurisdiction. The Americans wanted recognition and the whole thing collapsed eventually in 2001. So that was after five years talking, the head of the American delegation said, I'm sorry, we can't go ahead. So that was the end of that bit. But then it was decided as a kind of salvage exercise to have a choice of court convention, limited to business, a business to business relation. So this was quite a massive narrowing of the scope. But it is something that's very important. And it was thought on all sides that this was something that would be really useful in practice. And for that reason, sort of a good chance of success. And we negotiated that. And it finally reached a successful conclusion in 2005. And the Americans signed up Chinese, I mean, when I say sign, I mean sign the document, they didn't become parties. In fact, the Americans have not become a party. And I'm not fully aware of the reasons, but I am told the reasons were more to do with internal politics in America, constitutional issues of state rights against federal rights. Because in America, recognition of foreign judgments is a matter for state law. But negotiating foreign treaties is a matter for the federal government. And there was a famous case in Missouri and Holland, in which the judge was Oliver Wendell Holmes, who I'm sure all know about, in which he said that the federal government can do things with a treaty, which they can't do without a treaty. But many state rights advocates objected to that. And I think I might be wrong. But I think that was the reason why the Americans have not signed up. And we hope the Chinese will sign up. So far, they haven't. And I don't know why. Anyway, so that's the brief history. And who are the parties? Well, the parties are first of all, the European Union. And under EU law, if the European Union signs a treaty, it's binding on all the member states. So this treaty, this convention is binding on the member states under European Union law. And it's also binding under the terms of the convention itself. There are provisions which make clear that if the European Union is a party, the member states are bound by it. So that covers all the member states, except for Denmark. I won't go into the details of Denmark, but Denmark is in a special position. But Denmark signed separately. So Denmark is also a party, but a party in its own right. And the other member states are Mexico, which I think was actually the first one to become a party. So it was Mexico first, European Union second, and then Montenegro and Singapore. Singapore is an important litigation centre in commercial cases for Asia. And, of course, the UK was a member state of the EU, but unfortunately, has now left. So the UK was bound as a member state of the European Union. And that was the case until the end of 2020, the end of last year, although officially Brexit was earlier. Under the treaty with the European Union, EU law continued to apply until the end of 2020. And three months before that, the UK became a party in its own right. And that took effect on the first day of the month following the expiration of three months from the deposit of the UK instruments, which was the first day of January 2021. So it seems there's a seamless transition as far as the UK is concerned. There are a few problems because the EU law ceased to apply to the UK at midnight Brussels time on 31st of December, which is 11pm UK time. So when the UK joined, was it midnight UK time or midnight Brussels time? And I think it's midnight Central European time, because the Netherlands is the depository of the convention, and the Netherlands, luckily, is on Central European time. So I think there's a seamless transition. And there are various problems or arguments about what happens if the agreement is signed before the UK left and the court proceedings take place after the UK left. But I don't think those are problems. There are quite a lot of complications. If anybody's particularly interested, they can ask a question later on, but I don't want to go into all the details because it'll take quite a long time. So that's the convention coming into force for those countries. Now, first question, how do you interpret the convention? Well, obviously, the first thing you want to look at is the text, which is available on the HCCH website, and you can see it there. Secondly, I think the report, which Professor Doguchi and I did, is also relevant. And the report is also available on the website, and it tries to explain it. And I must emphasise what the purpose of the report is. It's not intended to be what I think the convention should mean. It's intended to be what the states who participate in the conference intended the convention to mean. There were some problems in the past, which I won't talk about. But for this convention, it was clear to everybody that that was the purpose of the report. And so after each session of negotiation, a draft of the report was sent to all the states that participated for their comments, and if they didn't like something, it was changed. And that goes right through to the final text. After it was signed, the convention was signed, the final text of the report was sent to all the member states. They're one or two small changes. So you can take it that the report fairly and accurately reflects what the parties intend. In addition to that, there are also the official minutes of the proceedings, which also indicate discussions in the negotiations and conclusions reached. And those minutes are published by the Hague Conference in book form, and you can see again what they're saying. And I'll come back to those. So those, I think, are the sources of interpretation of the convention. Now, I was going to say something about Brexit and the UK, but as I said previously, I think I'll skip over that, at least for the time being, because I don't think people from Latin America are terribly interested in these very complicated questions. So I'll now say a little bit about the convention itself. The first point, it's an important point, is that the convention only covers exclusive choice of court agreement. It does not cover non-exclusive. Now, there is an addendum on non-exclusive, which can be signed separately, but as far as I know, nobody signed it. Certainly the European Union has not signed it, the UK has not signed it. So it doesn't cover non-exclusive agreements. Non-exclusive agreements are covered by the, I think it's 2019, Hague Judgement Recognition Convention, which is not yet enforced as far as I know, but they are covered there. So it doesn't cover non-exclusive agreements. And it actually defines what agreements are covered. It says agreements designating the courts of one contracting state or one or more specific courts of one contracting state to the exclusion of the jurisdiction of all other courts. So you can have the courts of one contracting state, the courts of Mexico, and that means that any court in Mexico, every court, is covered. Or you can have the specific court, only the court for the federal district or whatever, I'm not very familiar with the specific, but you can designate just one court in Mexico, or you can designate more than one specific court, either the court of the federal district or the court of some other place, or two or three, or whatever. But you can't say the courts of Mexico or the courts of Spain, because those are two separate countries. So it's got to be either any court in a particular country, or a specific court in a particular country, or two or more specific courts in that country, but not the courts of Mexico or the courts of Spain. Or you can't say the courts of the UK or the courts of Denmark. Now, one very controversial issue, at least in the UK, maybe not elsewhere, is what's called asymmetric choice of court agreements, and I see a smile on Johan's face. There has been quite a dispute about that, particularly in England. An asymmetric choice of court agreement is a choice of court agreement, which is exclusive if one party brings a case, but non-exclusive if the other party. So it's obviously biased in favour of the other party. And guess where these are particularly common? The answer is international loan agreements. Banks always like to have the whip hand, and I think almost all international financial agreements, loan agreements and similar things, have a clause which reads something like, all proceedings brought by the borough shall be brought exclusively in the courts of England, because they like England, but proceedings brought by the bank can be brought either in England or anywhere else in the world, any court which has jurisdiction under its own law. Now, is that an exclusive choice of court agreement? Well, the answer is there have been a lot of arguments about that, particularly in many of these agreements, but the fact of the matter is that it was expressly discussed in the diplomatic sessions of the negotiations, and I can actually remember it quite clearly. And it was agreed that a choice of court agreement is exclusive only if it's exclusive irrespective of the party bringing the proceedings, and asymmetric choice of court agreements are not covered. And that is made clear in the report and also in the minutes of the proceedings. If you look at the relevant minute, it's for Wednesday the 15th of June 2005 in the morning, page 578. It especially says it was agreed that, despite that, quite a lot of influential figures in the UK ignore that and say they are covered. Anyway, I won't say any more about that. Next point, subject matter scope, what subjects are covered, and it is noticeably more restrictive than the Brussels regulation. For example, it does not cover carriage of goods or persons by sea, land or air, and that's quite an important thing. It means that a choice of court agreement in a bill of lading is not covered. And also it doesn't cover consumer contracts, employment contracts, all sorts, so quite a few things are excluded. However, it does cover lots of other things which are very important. Now, what is the content of the convention? I'm looking at the clock to make sure I don't overrun. And basically, it does three things. First of all, as we were told by the Secretary General just shortly ago, it requires the chosen court to hear the case. Now, why should it not hear the case? Well, there is a problem. What if another court is seized first? If you choose the court of country A, but the action is brought in country B, and country B ought to, if it's a contracting state, ought to refuse to hear the case, maybe it's not a correct contracting state. And you know, many countries have this pendence rule, that if the same action between the same parties is pending somewhere else, you can't hear the case. The Hague Convention makes clear that that is not a reason for refusing to hear the case. And the court must hear the case, and the court cannot refuse because another court is seized first. And also, it can't refuse because another court is more perfect. That's not so important in practice. So that is the first rule. The court designated must hear the case. Second important rule is that any court other than the court designated, if it is seized, must give up the case. That assumes, of course, that it is a contracting state. And there are some exceptions to that, if it would cause a manifest injustice, or there's a certain flexibility there. But that is nevertheless meant to be a strong rule. And the third rule is that the judgment of the court designated must be recognised and enforced in all other contracting states. Again, there are some exceptions. Briefly, what is the position of anti-suit injunctions? And the answer is, they are not required, but they're not prohibited either. It says that interim measures of protection are neither required nor precluded. So the court's never obliged to grant anti-suit injunctions, but it's not precluded. On the other hand, a court can grant a counter-anti-suit injunction, another court, which are being granted now by German and French courts, which is requiring the party to obtain the anti-suit injunction to have it rescinded. And he doesn't do that. He's subject to a massive or rapidly increasing fine. Last point, arbitration or choice of court. And some of you have noticed, or perhaps, that a well-known arbitration lawyer, Gary Bourne, who is American but practices out of London, has started a campaign saying that parties, nobody should ratify the Hague Convention on choice of court, and those who already ratified it must denounce it. And what arguments does he give? His argument is, well, in the world today, there are a lot of dishonest, corrupt judges, so you don't want to have a choice of court. Of course, there are also dishonest, corrupt arbitrators, but he would say that the parties can choose the arbitrator, they can't choose the judge. Of course, they can choose the court, and there are a lot of courts in the world which are, I think, completely honest and non-corrupt. So, I don't think that argument is very good. In any event, the Hague Convention does have quite strong safeguards against recognising judgments which were obtained by fraud or corruption. Article 9d and 9e, a judgment may refuse recognition obtained by fraud in a matter of procedure. Obviously, bribing a judge would come to. 9e, if a recognition were manifestly incompatible with the public policy of the requestor state, including situations where the specific proceedings were incompatible with fundamental principles of procedural fairness. So, I think that the arguments put forward by Mr Bourne are really rubbish, and I think maybe arbitrators are afraid that this convention is going to take business away from them. Because one big advantage of choosing court rather than arbitrator is that you don't have to pay the judge except for rather small court fees. The taxpayer pays the judge, while an arbitrator you must pay, and arbitrators, at least good ones, do not come cheap. Anyway, I think I've said enough. I think I'm supposed to stop at this point, so I will stop. I just want to say that I think there are no drawbacks to the convention, nothing wrong with it, nothing bad if you sign it, and there are a lot of advantages. So, I think I'm in favour of everybody signing it. Thank you very much.