The 2019 Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters offers certainty in cross-border enforcement of judgments.
On 2 July 2019, the Hague Conference on Private International Law adopted the 2019 Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (2019 Hague Convention or the Convention). The Convention aims to provide a new global regime for the recognition and enforcement of civil and commercial judgments, much like the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) does with respect to arbitral awards and EU Regulation No 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast) (the Recast Brussels Regulation) does with respect to the recognition and enforcement of civil and commercial judgments within the European Union.
If successful, the 2019 Hague Convention will provide a single uniform instrument pursuant to which civil and commercial judgments may be enforced worldwide, instead of the existing patchwork of bilateral and regional arrangements for the cross-border enforcement of court judgments. As the Minister of Foreign Affairs of the Netherlands, Stef Blok, observed, this uniform global regime would offer “certainty and legal security in cross-border transactions and litigation”. The success of the 2019 Hague Convention will depend, however, on a significant number of states ratifying and acceding to the Convention, to make its coverage as comprehensive as the New York Convention.[i]
Recognition and enforcement regime
The 2019 Hague Convention’s key function is to provide for the recognition and enforcement of civil and commercial judgments between states party to the Convention. The Convention provides that a judgment given by a court of a state party to the Convention (the State of Origin) is to be recognised and enforced in any other state that is also party to the Convention (the Requested State), in accordance with the regime in Chapter 2 of the Convention.
That regime in Chapter 2 provides that:
- A judgment may only be recognised by the Requested State if it is enforceable and has effect in the State of Origin
- If the judgment is subject to review by the courts in the State of Origin or if the time limit for seeking ordinary review has not expired, the courts of the Requested State may postpone or refuse to recognise or enforce the judgment at that time
- The Requested State is not permitted to conduct any review of the merits of the judgment, except to the extent necessary for the application of the Convention
If these requirements are satisfied, the Requested State may only refuse to recognise or enforce the judgment in limited circumstances, including any of the following:
- The defendant was not notified of the proceedings in sufficient time and in such a way as to enable them to arrange for their defence (unless the defendant entered an appearance and presented their case without contesting notification, provided that the law of the State of Origin permitted notification to be contested)
- The judgment was obtained by fraud
- Recognition or enforcement of the judgment would be manifestly incompatible with the public policy of the Requested State
- The proceedings in the court of origin were contrary to an agreement to determine the dispute in a court of a state other than the State of Origin
- The judgment is inconsistent with a judgment given by a court of the Requested State in a dispute between the same parties
- The judgment is inconsistent with an earlier judgment given by a court of another state between the same parties on the same subject matter, provided that the earlier judgment fulfils the conditions necessary for its recognition in the Requested State
These grounds are similar, albeit not identical, to the grounds pursuant to which recognition or enforcement of a judgment may be refused under the Convention of 1 February 1971 on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters and the Recast Brussels Regulation.
Recognition or enforcement under the 2019 Hague Convention may also be postponed or refused if proceedings between the same parties on the same subject matter are pending before a court of the Requested State, where: (a) the court of the Requested State was seized before the court of origin; and (b) there is a close connection between the dispute and the Requested State. A postponement or refusal on this basis however does not prevent a subsequent application for recognition or enforcement.
Which judgments are covered?
The 2019 Hague Convention applies to the recognition and enforcement of judgments in civil or commercial matters, but excludes judgments given in insolvency, defamation, privacy, intellectual property, family law matters, and most anti-trust matters. The Convention also does not apply to arbitration and judgments given in arbitration-related proceedings, primarily to avoid the 2019 Hague Convention interfering with matters governed by the New York Convention.
The Convention also uses a broad definition of what constitutes a “judgment”. Specifically, it includes any decision on the merits given by a court, including any determination on costs or expenses of the proceedings related to a decision on the merits. Significantly, this definition includes both money and non-money judgments, which represents a material expansion from many existing regimes for cross-border recognition and enforcement of judgments that only apply to money judgments. Recognition and enforcement of judgments for interim measures, such as injunctions and asset freezing orders, are, however, not within the Convention’s scope.
Under the Convention, a judgment will only be eligible for recognition and enforcement if it meets one of the requirements set out in Article 5 of the Convention. These requirements in effect define the jurisdictional bases exercised by the court of origin that are recognised by the Convention as legitimate to trigger mutual recognition and enforcement obligations under the Convention.
These jurisdictional bases consist of three main categories:
(1) Connection between the defendant and the State of Origin
(2) Connection between the claim and the State of Origin
(3) The defendant’s express consent to the jurisdiction of the courts of the State of Origin
Examples of these jurisdictional bases include:
(a) Where the person against whom recognition or enforcement is sought was habitually resident in the State of Origin at the time that person became a party to the proceedings in the court of origin
(b) The judgment ruled on a non-contractual obligation arising from death, physical injury, damage to or loss of tangible property, and the act or omission directly causing such harm occurred in the State of Origin, irrespective of where that harm occurred
(c) The judgment was given by a court designated in an agreement in writing, other than an exclusive choice of court agreement, which are governed by the Convention of 30 June 2005 on Choice of Court Agreements (2005 Choice of Court Convention). Notably, asymmetrical jurisdiction agreements are generally not considered exclusive under the 2005 Choice of Court Convention, but may now be covered by the 2019 Hague Convention. [ii]
Despite the requirements in Article 5 of the Convention, a judgment that has ruled on rights in rem in immovable property may only be recognised and enforced if the property is situated in the State of Origin.
Status of the Convention
The 2019 Hague Convention will only enter into force once at least two states have ratified it. At present only Uruguay has signed the Convention. While further signatories and the entry into force of the Convention are expected, its true benefit will only be realised once a large number of states become party to the Convention, and thereby expands the number of jurisdictions in which cross-border recognition and enforcement of judgments can be sought. While this expansion might take some time, the Convention is a major development with significant potential to offer greater certainty to cross-border transactions and litigation. The Convention’s influence should also be seen in light of the recent trend towards specialised international commercial courts that offer an alternative to international arbitration.