The Hague Convention on Choice of Court Agreements (the "Convention") is an international instrument that has been in the shelf for quite a long time, so this Convention coming into force on October 1, 2015 is a major event.
This Convention will certainly affect international transactions, cross border litigation and the enforcement of foreign judgments, at least between Mexico and the members of the European Union at this initial stage and until more countries ratify the Convention.
In a nutshell, this Convention seeks to ensure the enforceability of choice of court agreements in civil and commercial matters, and to ease the recognition and enforcement of the judgments derived from judicial proceedings initiated under the auspices of said choice of court agreements.
Background. A rather long story, short
The idea behind this convention dates back to the decade of the 1990's and it was originally conceived as a treaty between the United States of America and the European Community. However, the idea of an international instrument encompassing more jurisdictions was quickly developed.
After many years of drafting, on June 30, 2005, the final text of the Convention was drawn up and adopted with the clear aim of making choice of court agreements effective by securing three aspects:
- That the selected court must hear the case;
- That other courts will refrain from hearing the case;
- That the judgment of the selected court will be recognized and enforced.
Mexico's signature and ratification
In 2007 Mexico signed and ratified the Convention, but it stood alone, as the Convention required the adoption and ratification of two States in order to come into force.
The awaited ratification by the European Union
On April 1, 2009, the European Union also signed the Convention, but it was until June 11, 2015, when it ratified it.
With this ratification, the Convention was supposed to enter into force on the first day of the month following the expiration of a period of three months, after the deposit of the second instrument of ratification, meaning October 1, 2015.
The potential benefits
First and foremost, the Convention will protect the choice of court agreements, meaning courts hearing a case where a different forum was chosen contractually will generally stay or terminate the proceedings and refer the dispute to said forum.
But also, the Convention will facilitate enforcement of foreign judgments. Like in other countries, in Mexico, a party trying to seek recognition and enforcement of a foreign judgment needs to start a long and tiresome process that involves the satisfaction of many requirements and were a favorable outcome is not always guaranteed.
Thus, albeit it is generally accepted that European and Mexican courts tend to enforce choice of court agreements, the fate of an eventual judgment was never entirely clear. For this reason the entry into force of this Convention means a more favorable outlook for the enforcement of foreign judgments.
As of this date any potential benefit that could be reaped from the Convention will be limited to the countries of the European Union, except for Denmark, and Mexico. However, this is not a trivial issue: the total commercial exchange between the European Union and Mexico in 2014 amounted to USD 65 billion and the cumulative flow of direct foreign investment between these two entities, for the same year, totaled USD 145 billion.
Moreover, it is reasonable to expect that, if the Convention proves its worth, more jurisdictions will adopt the Convection, including the United States of America that have already signed it.
Scope of application
This Convention will apply only to international cases, where the parties have agreed to an exclusive choice of court and only for civil or commercial matters.
There are several exclusions  from the scope of application in article 2 of the Convention; some of them touch upon seemingly commercial issues, for example consumer protection, competition law, arbitration and insolvency. Additionally, the European Union made a declaration excluding its application to certain insurance matters.
Requirements for the recognition and enforcement
Subject to the interpretation and actual application of the Convention, in order to start the recognition and enforcement proceedings, the petitioner must file:
- a complete and certified copy of the judgment;
- the exclusive choice of court agreement, a certified copy thereof, or other evidence of its existence;
- if the judgment was given by default, the original or a certified copy of a document establishing that the document which instituted the proceedings or an equivalent document was notified to the defaulting party;
- any documents necessary to establish that the judgment has effect or, where applicable, is enforceable in the State of origin;
- in some cases, a certificate of a court of the State of origin indicating that the judicial settlement or a part of it is enforceable in the same manner as a judgment in the State of origin will be needed.
- finally, a certified translation of the documents into the official language of the requested State.
This Convention is related and will most likely interact with other conventions such as the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters and the Convention on the Taking of Evidence Abroad in Civil or Commercial Matters, among others. The particulars of the interaction is still to be determined.
The hope behind the Convention is that it becomes an instrument comparable with the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the "New York Convention"), but for court judgments. The Convention does have the potential to achieve that status and we trust that judges both in Mexico and in the European Union, as well as in the other jurisdictions that eventually ratify the Convention, will see the importance of taking into account its international character when applying its provisions and the necessity of consistent and uniform interpretation, as provided by article 23 of the Convention.
Apart from this, it is clear that certainty as to the enforceability of choice of court agreements and the resulting judgments is a vital component of a healthy judicial system that will most likely increase the commercial exchange between countries, as it has been the case with international commercial arbitration.