U.S. Signs Hague Choice of Courts Convention

by Duncan Hollis

Just before President Clinton left office and on the last day it was open for signature, the United States signed the Rome Statute of the International Criminal Court.  The Bush Administration would later, through John Bolton, inform the United Nations that the United States did not intend to ratify the treaty, thereby removing any obligations associated with the U.S. signature (for reasons too long to elaborate here, I reject the idea that Bolton “unsigned” the Rome Statute, notwithstanding the colloquial popularity of that term). 

The Bush Administration undertook a similar, last-minute treaty signing this past Monday, when John Bellinger signed the Hague Choice of Courts Convention for the United States.  I doubt, however, that the move will prove any where near as controversial, nor do I expect the Obama Administration to walk back from this signature any time soon (whether they prioritize its ratification is a different question).  The Hague Choice of Courts Convention essentially seeks to replicate for covered commercial contracts a regime of judgment recognition in cases where parties exclusively agreed on a particular court for their disputes, akin to the recognition of arbitral awards that occurs under the New York Convention.  As Ronald Brand has explained, the Convention sets out three basic rules:

1) the court chosen by the parties in an exclusive choice of court agreement has jurisdiction;

2) if an exclusive choice of court agreement exists, a court not chosen by the parties does not have jurisdiction, and must decline to hear the case; and

3) a judgment resulting from jurisdiction exercised in accordance with an exclusive choice of court agreement must be recognized and enforced in the courts of other Contracting States (other countries that are parties to the Convention).

If the U.S. joins the treaty, there will be some interesting questions about how the Convention will actually operate (as my colleague William Woodward notes differing U.S. state policies on franchise and mass market contracts may make U.S. compliance difficult absent a declaration under Article 21 that such contracts are excluded from the Convention’s coverage). 

Of course, this assumes that the treaty will come into force at all.  Under Article 31, only two states need to consent for that to happen.  That’s as low a hurdle as one can have for a multilateral treaty.  But today, nearly 3 and a half years after the treaty’s conclusion, Mexico is the only state to indicate its consent to be bound (via accession), and the United States is actually the treaty’s first signatory.  Unlike the ICC, therefore, where U.S. signature was a reluctant (and temporary) effort to recognize a growing international consensus favoring the emergence of that international tribunal, here the United States seems to be trying to lead other states into creating this new recognition of judgments regime.  Whether this move is successful depends on a variety of factors, including the Obama Administration’s views on the treaty and the reasons other states have withheld their support so far (e.g., waiting on the United States or other major players to make a move, a lack of enthusiasm for a legal system of enforcement where comity often already frequently results in foreign judgment enforcement, or substantive objections to the treaty’s provisions).  In any case, true success for the Hague Choice of Courts Convention will require the consent of many more states beyond the United States and Mexico (although that would at least give contractual relations for U.S.-Mexico businesses a different spin).  By way of contrast, the New York Convention has 144 contracting parties.  So, although it won’t have the front-page attention of GTMO’s closing or even what stance the new Administration takes on the ICC, it’ll be interesting to see whether the United States proceeds to ratify this latest Hague Convention or if U.S. signature will serve as a precursor for additional states to sign or join the treaty.  Otherwise, the Hague Choice of Courts Convention may find itself joining the long list of unperfected treaties.

http://opiniojuris.org/2009/01/22/us-signs-hague-choice-of-courts-convention/

One Response

  1. My guess is it will be ratified easily.  Corporate America loves these kind of provisions, just as they love the FAA and the state equivalents.  It gives them a lot more predictability and therefore efficiency and cost savings. And, even though much hulabaloo is made of avoiding these choice of law/forum terms in adhesion contracts, it doesn’t seem to actually happen very often.  In Delaware, at least (and I acknowledge the forum isn’t a great example, what with Delaware’s reputation), such clauses are deemed binding even in adhesion contracts so long as they are not  products of fraud. 

    I wonder what kind (and size) of effect this treaty will have on forum-shopping, and what states will do about it.

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