The 2005 Hague Convention on the Choice of Court Agreements, which came into force on 1 October 2015, has the potential to seriously alter the dispute resolution landscape. It currently binds Mexico and all EU member states (except Denmark). The USA and Singapore have also signed up, but have not yet ratified it.
Where a contract states that disputes between parties shall be determined by the courts of a specific jurisdiction then the 2005 Hague Convention provides that such nominated courts must be used for pursuing litigation in relation to those disputes (except in very limited circumstances). Any courts of other jurisdictions that are subject to the Convention must enforce the decision of the nominated court without a review of the merits of the case.
The 2005 Hague Convention seeks to prevent the same proceedings being issued in multiple jurisdictions. It also seeks to achieve a greater level of consistency in the enforcement of foreign judgements. The cost uncertainty associated with multiple proceedings and the inconsistency of approach to enforcement have contributed to the popularity of arbitration and other forums for the resolution of international disputes. However, if the Convention is successful in removing these issues it is likely that parties will be more attracted to the benefits of litigating in certain jurisdictions (for example the strict timetable and cost budgeting requirements under the civil procedure rules of the English courts).
As the international courts become more appealing by developing newer and more efficient ways to deal with complex multi-jurisdictional disputes there is a fear amongst many, including Singapore’s chief justice Sundaresh Menon, that other forms of dispute resolution that fail to adapt may be disregarded. This is being compounded by an increase in the number of arbitration decisions that are being challenged in the courts. Accordingly, Menon is calling for a review and reform of the international arbitration rules to ensure that it is not left on the side line as litigation becomes increasingly more popular.