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Introduction
The Hague Conference on
Private International Law has released its Draft
Convention on the Recognition and Enforcement of Foreign Judgments in Civil or
Commercial Matters (“Convention”).
It is scheduled for adoption at the Hague Conference’s 22nd
Diplomatic Session in June 2019. Work on
this Convention has been underway since 1992.
It is encouraging to see some momentum building for this Convention, a
project that started back in 1992. If many
countries sign, the Convention will be useful.
Enforcement of foreign judgments is highly restricted, or not available,
in several big countries which impose a reciprocity requirement, such as the
People’s Republic of China, the Russian Federation, India, Germany, Japan, and
Austria. The Convention would eliminate reciprocity as
a prerequisite for enforcement. The Convention
has a long way to go before it catches up with its equivalent for arbitral
awards, namely the 1958 Convention on the Recognition and Enforcement of
Foreign Arbitral Awards a.k.a. the New York Convention, which is in force in 159
countries.
Highlights
of the Draft Convention
The draft Convention requires
that a judgment given by a court of a Contracting State (the “State of Origin”)
shall be recognized and enforced in other Contracting States (the “Requested
State”) if certain conditions are
met. Those conditions are similar to
those in the common law in Canada, including that the judgment is final, and
that the court in the State of Origin had jurisdiction over the defendant and
subject matter. The Convention
considers the court to have had jurisdiction if the judgment debtor:
a.) was
habitually resident in the State of Origin,
b.) had
its principal place of business or at least a branch there, or
c.) attorned
to the jurisdiction (e.g. by suing there, by consenting to jurisdiction in a
forum selection clause, or by arguing the merits of the case without contesting
jurisdiction).
There is jurisdiction also if the case pertained to
real property located in the State of Origin, or pertained to a non-contractual
obligation involving a death, physical injury, or loss or damage to property,
and the act that caused such harm occurred in the State of Origin. There
are also some other bases for jurisdiction in the Convention.
The Convention expressly
bars any review of the merits of the judgment, except as may be required to
apply the Convention.
Recognition and
enforcement may (not must) be refused only on specific grounds set out in the
Convention, which grounds are similar to the defences found in the common law
of Canada, such as a breach of natural justice, more specifically if the
defendant was not properly notified of the court proceeding in the State of
Origin, or, if the defendant was in the Requested State, he/she was notified of the proceeding in a manner
incompatible with the fundamental principles of the Requested State regarding
service of documents. Enforcement
may also be refused if the judgment:
a.) is
inconsistent with another judgment in the Requested State;
b.) is
inconsistent with an earlier judgment from another state;
c.) was
issued in a proceeding that was contrary to a forum selection clause;
d.) is
manifestly incompatible with the public policy of the Requested State; or
e.) was
obtained by fraud.
Enforcement may also be refused, or postponed, if
there is a court proceeding in the Requested State involving the same parties
and subject matter, provided that the court was seized before the court in the
State of Origin and there is a close connection between the dispute and the
Requested State. Enforcement may also be refused to the extent the judgment
imposes non-compensatory damages, e.g. punitive damages.
Judgments in some types
of cases are excluded from the Convention, such as family law, insolvency,
wills and estates, defamation, some maritime law cases, and the carriage of
passengers and goods. Nor does the
Convention apply to judgments in tax or customs matters or law enforcement. However, the mere fact a government is a
party to the proceeding does not by itself exclude the case from the reach of
the Convention.
Commentary
Overall, the Convention
would substantially improve international cooperation in legal matters, and
substantially improve the efficacy of court judgments.
However, the Convention
unfortunately will probably not remedy the problems of excessive delays or bureaucratic
requirements for enforcement proceedings seen in some countries (e.g. Mexico,
India). Although the Convention says the
court in the Requested State “shall act expeditiously”, the Convention does not
attempt to streamline procedures. It allows each country to follow its own
procedures for enforcement.
The Convention provides welcome
protection to consumers who are judgment debtors in consumer contract cases and
to employees who are judgment debtors in employment contract cases. Contracts of adhesion often contain forum
selection clauses that are unfavourable to the consumer or employee. See for example the clause for Uber drivers in
Heller v Uber 2019 ONCA 1. The court
in the State of Origin does not have jurisdiction, for the purpose of enforcement,
based on the consumer’s or employee’s consent to the court’s jurisdiction
unless that consent was addressed to the court, i.e. not given merely by way of
a forum selection clause.
The Convention does
little for enforcement of judgments for injunctions or other monetary relief. Enforcement
of such judgments under the Convention is unlikely. The Convention does not apply to many of the
main areas of law where such remedies are given, namely family law (orders for access),
defamation (injunctions to not publish defamatory material), anti-trust (injunctions
restraining anti-competitive tactics) and intellectual property, if the infringement
occurred outside the State of Origin (injunctions restraining the sale of
infringing products). However,
the text of the Convention does not exclude judgments for non-monetary remedies,
save for two exceptions. The
Convention’s definition of judgment does not address the type of remedy, other
than to exclude interim measures of protection.
Article 11 requires recognition and enforcement of judgments regarding
infringement in intellectual property matters only to the extent of a monetary
remedy. One can arguably infer that the Convention
does apply to judgments for non-monetary remedies; otherwise the Convention
would not need to specify the two aforementioned exceptions.
