Impact of the EU acceding to The 2019 Hague Judgments Convention

The 2019 Hague Judgments Convention[1] (‘the Judgments Convention'), provides a reciprocal framework for the recognition and enforcement of national court judgments in civil or commercial matters. Following the recent decision of the EU to join the Judgments Convention, we consider in this article how a number of different jurisdictions, including France, Germany, Spain, the Netherlands, Australia and the UK view the Judgments Convention and the impact it may have on the recognition and enforcement of judgments from the courts of other countries in those jurisdictions.

It has been recognised by the international legal community that there is increasing frustration by businesses who operate cross-border at the time, cost, and complexity of enforcing national court judgments across borders. This means their transactions are faced with added risks and a lack of predictability regarding whether they can have a court judgment from one jurisdiction recognised and enforced in another where their counter party may have assets. This contrasts with the position in international arbitration where there is one overarching legal instrument (the 1958 New York Convention[2]) that provides a single framework for recognition and enforcement of arbitral awards in most of the countries of the world. While the application of the New York Convention is not without its own challenges, it at least provides a basis for the uniform recognition and enforcement of arbitral awards in a way that is absent with the use of court judgments. The Judgments Convention is intended to remedy this.

The aim of the Judgments Convention is to provide legal certainty and predictability for parties involved in cross-border transactions when the courts in those jurisdictions who are party to the Judgments Convention are asked to recognise and enforce court judgments from other countries who are also parties.

Readers may already be familiar with the 2005 Hague Choice of Court Convention[3] which provides a mechanism by which parties, from signature states, can choose which court or jurisdiction they wish to hear their dispute and the courts of those states must recognise that choice. These types of agreements are known as exclusive choice of court agreements or ‘forum selection’ or ‘jurisdiction’ clauses. The Judgments Convention is wider in scope because it is not restricted only to the enforcement of judgments which stem from an exclusive choice of court of agreement. However, it is not designed to override existing treaties and gives respect to bilateral and regional treaties already in place[4]. In addition, parties to the Judgments Convention can make declarations that they do not wish to recognise judgments from particular states[5]. Yet, the Judgments Convention is also narrower in scope because it only deals with enforcement of judgments, whereas the 2005 Hague Choice of Court Convention also looks at the question of jurisdiction, albeit in respect of exclusive jurisdiction clauses only, as discussed above.

Contracting Parties to the Judgments Convention

In order to become a contracting party to The Judgments Convention, a state needs to firstly sign and then ratify or accede to it. Following ratification, the Judgments Convention will only come into force 12 months later. For the Judgments Convention to enter into force, it needs a minimum of two states to ratify it. Significantly, on 12th July 2022 The Economic and Financial Affairs Council of the EU formally adopted the EU Council Decision concerning the accession of the EU (apart from Denmark) to the Convention[6]. On 29 August 2022 the EU deposited its instrument of accession, and the Ukraine deposited its instrument of ratification. The Judgments Convention will enter into force between the Ukraine and the EU (but not Denmark) only on 1 September 2023.

However, the question remains, how many other jurisdictions will join, and will it be effective on the ground once it comes into force? We have asked our International Dispute Resolution colleagues what they think the impact of the Judgments Convention will be in their jurisdictions.

France

The entry into force of the Judgments Convention will have limited impact on the recognition of foreign judgments in France not only because the Convention provides that national law, where more favourable than the rules contained in the Convention, may be applied, but also because the rules enshrined in the Convention are similar to those found in French international private law.

In accordance with Article 15 of the Judgments Convention (subject to the exception in relation to property matters set out in Article 6), Contracting States are still allowed to recognize or enforce judgments in application of their more favourable national law. Therefore, since French law merely requires that the judgment for which recognition is sought was issued by a court with a clear connection with the dispute, the effect of Article 15 will result in the application of French law to issues of recognition and enforcement of judgments.

Nevertheless, even if French courts decide to apply the rules of the Judgments Convention instead of French international private law, the outcome will be the same since both enshrine the same rules. Indeed, Article 7 of the Judgments Convention and French international private law both impose flexible conditions for the effectiveness of foreign judgments, i.e., compliance with public policy, including the fundamental principles of procedural fairness, the absence of fraud, and the absence of irreconcilability between judgments. Therefore, according to both the Judgments Convention and French law, the judge overseeing the enforcement proceedings must verify that the court that rendered the judgment has a sufficiently clear connection with the dispute such that the court’s jurisdiction to decide the dispute appears legitimate. Moreover, Article 4.2 of the Judgments Convention, as is the case under French law, prohibits any review of the merits of the judgment (or the law applied) by the enforcement judge.

Germany

For Germany, the Convention becomes binding as European law in relation to other contracting states twelve months after the deposit of the instrument of approval by a representative of the European Union in The Hague. As European law, some implementing provisions are needed in German domestic law, in particular under section 722 of the CCP (the German Code of Civil Procedure), as, running in tandem with European law and international treaty provisions, foreign judgments can also be declared enforceable by an enforcement judgment pursuant to the latter provisions.

Overall, the uniform regulation for the recognition and enforcement of foreign decisions follows the principles of the German sustainability strategy. Not only do the Judgments Convention and domestic law contribute to the realisation of sustainable development goal 10 “Reduce inequality within and between countries”, but as well as the sub-goals 16.3 “Promote the rule of law at national and international level and ensure equal access to justice for all” and 16.6 “Build effective, accountable and transparent institutions at all levels”. These two goals are part of a total of seventeen United Nations objectives adopted at the Rio+20 Conference in 2012 and entitled “Sustainable Development Goals”.[9]

Businesses’ transactions are not faced anymore with added risks and a lack of predictability regarding the recognition and enforcement of a decision. On the contrary, the Judgments Convention provides, similar to the New York Convention, legal certainty and predictability. Since the Judgments Convention provides a basis for the uniform recognition and enforcement of decisions, it strengthens international legal assistance in civil and commercial matters.

The Netherlands

Instruments of international law, such as treaties and conventions, have direct effect in the Dutch legal system. Therefore, no acts of implementation in Dutch law are required for the Judgments Convention to become binding after it is in force. Nevertheless, a separate enforcement law exists for certain international conventions/treaties on the enforcement of foreign judgments.[10] Currently, no new draft law regarding the implementation of the Judgments Convention has been published. As provision 13 of the Judgments Convention on the procedure for recognition, declaration of enforceability or registration for enforcement states this procedure is governed by national law, it is not expected that an implementation law will be published for the Judgments Convention.

The Dutch Code of Civil Procedure (“DCCP”) already contains provisions regarding the enforcement of foreign judgments that are recognized in the Netherlands on the basis of international conventions or law. The party that wishes to enforce the foreign judgment will have to submit a petition to the competent district court (located in the district where the counterparty has its residence, or the district where the judgment will be enforced).

After the petition has been received by the court, the petitioner will have to properly summon the counterparty to formally appear in the proceedings (represented by a Dutch lawyer), and the counterparty is given the opportunity to be heard by the district court. As the district court will not review the case/merits of the judgment, the hearing’s purpose is solely to allow the counterparty the opportunity to argue that one of the (very limited) grounds for non-recognition of the judgment is present. In absence of any of such grounds, the district court will grant the requested leave, and the foreign judgment can be enforced in the Netherlands in the same way as Dutch judgments can be enforced.

While the leave is immediately enforceable after it has been granted, an appeal against the decision to grant the leave can be lodged within one month after the decision has been rendered. Lodging an appeal will not suspend the enforceability of the foreign judgment.

Spain

While any international private law development is welcome, a priori, the accession of the EU to the Judgments Convention will not have a very significant effect or impact in Spain, since the recognition and enforcement of foreign judgments was extensively modified and updated in 2015.

The procedure for the recognition and enforcement of foreign judgments in civil and commercial matters in Spain is regulated in the Spanish Law 29/2015, of 30 July, on international legal cooperation in civil matters (hereinafter “The law on International Legal Cooperation”) with reference to the Spanish Law 1/2000, of 7 January, on civil procedure.

This law is based on a broadly favourable concept of international legal cooperation, even in the absence of reciprocity, but with the possibility of refusal[11].

On this basis, the Law on International Legal Cooperation will be applicable when there is no EU regulation or an International Treaty to which Spain is a party, and which regulates these matters. It will also apply in cases where Spain has not signed a Bilateral Agreement on this matter.[12]

In this sense, with the accession of the EU to the Judgments Convention, Spain should hierarchically relegate the application of the Law on International Legal Cooperation to that established by the Convention. However, the practice will be different since Article 13 of the Judgments Convention does not regulate the procedure to be followed, leaving it to the domestic laws of the States Parties.

Consequently, requests for recognition and enforcement of judgments under the Judgments Convention must also follow the procedure provided for in the Law on International Legal Cooperation, as has been the case up to now with States Parties with which Spain has not signed any treaty, such as Uruguay, Costa Rica or the USA.

Australia

Australia has not signed the Judgments Convention. With the exception of the UK[13]  and New Zealand,[14] there are no international agreements codified in Australian law governing the reciprocal recognition and enforcement of Australian/foreign judgments. For all other countries (including Australia’s major trading partners such as the US, European Union or China), the recognition of foreign judgments in Australia is subject to a piecemeal and complex process found in legislation or the general law.

Accordingly, for businesses, there would be great utility in Australia’s accession to the Judgments Convention.

In Australia, the enforcement of most foreign judgments currently requires proceedings to be commenced in Australian courts, which can add time and expense at the end of the litigation process. Further, the enforcement of foreign judgments in Australia is limited to recognising and enforcing money judgments.[15]

Should Australia accede to the Judgments Convention, its implementation in Australia will be subject to a domestic review process, which, based on past experience, can take many years.[16]

The UK

The UK has yet to reach a decision as to whether it will accede to the Judgments Convention. However, in the absence of the EU agreeing to the UK joining the Lugano Convention[17]  which would provide a framework for the post-Brexit mutual recognition of UK and EU court judgments, the Convention may appear as a tempting solution to recreate some of the reciprocity on recognition and enforcement of court judgments which existed between the UK courts and the courts of EU Member States regarding the enforcement of civil court judgments pre-Brexit. Whilst the Judgments Convention is not a like for like replacement to the Brussels Regulation regime (which of course continues to apply as between EU member states) it will offer businesses, in a more limited way, a mechanism to ensure most civil and commercial judgments are recognised and enforced. Currently those seeking enforcement have to rely on the individual national laws of each EU Member State, unless there is an extant bilateral treaty, or the judgment emanates from an exclusive jurisdiction clause and falls under the 2005 Hague Convention on Choice of Court Agreements.

With thanks to Maximilian Kahn, Jonathan Tay, Wouter Kroeze, Clara Fenniri and Sofia Manzanares for their contributions to this piece.

For additional disputes related content please access Disputes+

[1] Also known as the The Convention of 2 July 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters

[2] United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards

[3] The Convention of 30 June 2005 on Choice of Court Agreements

[4] Article 23

[5] Article 29. Similar articles appear in the 2005 Choice of Court Convention at articles 19-22

[6] For these purposes the EU, is defined as a Regional Economic Integration Organisation, and therefore is considered a single contracting party

[7] List of derogations can be accessed here: HCCH | #41 - Status table

[8] Excluding Denmark

[9] Can be found at: https://www.un.org/sustainabledevelopment/

[10] For example, for the Lugano Convention.

[11] This law only provides for the refusal of international legal cooperation (and even the recognition and enforcement of foreign judgments) when there is a repeated and manifest lack of reciprocity on the part of another State towards Spain. In such cases, the Spanish Government is entitled to approve a Spanish Royal Decree refusing legal cooperation with a given State.

[12] To date, Spain only has Bilateral Agreements with third states on the recognition and enforcement of judgments in civil and commercial matters with El Salvador, Mexico, Israel and Tunisia.

[13] Reciprocal Recognition and Enforcement of Judgements in Civil and Commercial Matters 1994

[14] Trans-Tasman Proceedings Act 2010 (Cth) (‘TTPA’); Trans/Tasman Proceedings Regulation 2012 (Cth) (‘TTPR’)

[15] Section 5(6) of the Foreign Judgments Act 1991 (Cth) provides for the registration of non-money judgments from countries designated by the Foreign Judgments Regulations 1992 (Cth), however the courts have not yet exercised this power.

[16] As a point of comparison, the Hague Convention on Choice of Court Agreements was agreed to in 2005 and entered into force in 2015. Although Australia’s Attorney-General’s Department and the Joint Standing Committee on Treaties recommended Australia’s accession in 2016, Australia is still yet to sign the Choice of Court Agreement.

[17] The 2007 Convention on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters