Thursday, 28 February 2019

Draft Convention on Recognition & Enforcement of Foreign Judgments


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.    


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.