On 2 July 2019, the Hague Conference of Private International Law (HCCH) adopted the Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (Judgments Convention; see full text of the convention here).

The Judgments Convention aims to provide an efficient system for the recognition and enforcement of foreign judgments in civil or commercial matters. It aims to enhance predictability and justice in cross-border legal relations in civil and commercial matters, reducing the risks and costs associated with dispute resolution. Implementation of the convention should, according to the Draft Explanatory Report of the HCCH, facilitate international trade, investment and mobility.

The Judgment Convention has not yet entered into force. The first – and so far, only – state that has signed the convention is Uruguay, which signed during the closing ceremony of the HCCH on 2 July 2019. On 3 July 2019, the European Commission announced that it will start the process of preparing EU accession to the convention.

History of the Judgment Convention

As early as 1971, the HCCH adopted a convention on the recognition and enforcement of foreign judgments in civil and commercial matters. However the only states to sign this convention were Cyprus, the Netherlands, Portugal, Kuwait and Albania. This low number can be attributed to the fact that the 1971 convention requires contracting states to conclude supplementary bilateral agreements in order for the convention to take effect.

The new Judgment Convention is the result of the HCCH's ''Judgments Project'', which started in 1992. The project related to two aspects of private international law: the international jurisdiction of courts, and the recognition and enforcement of their judgments abroad. The project led to the Hague Convention on Choice of Court Agreements in 2005. Fourteen years later, this convention is in force in the EU, Mexico, Montenegro and Singapore. It has also been signed, but not yet ratified, by China, Ukraine and the United States. In the 2005 convention, the contracting states not only agree to respect contractual choice of forum clauses in civil contexts as an exclusive ground for jurisdiction, but also accepted the requirement for any judgment rendered by a court of a contracting state which had jurisdiction pursuant to an exclusive choice of forum clause to be recognised and enforced in any other contracting state.

In 2011 the HCCH continued the Judgments Project and started preparing proposals for a convention on the recognition and enforcement of judgments. This summer, six years later, the HCCH adopted the new convention.

Recognition and Enforcement of Foreign Judgments

The Judgment Convention applies to all judgments issued in civil and commercial matters. This grants the Judgment Convention a larger scope than the Convention on Choice of Court Agreements of 2005, which is limited to the recognition and enforcement of judgments rendered by a court competent pursuant to a choice of forum clause. Below we discuss some of its features.

As is internationally accepted, a judgment is eligible for recognition and enforcement if it was rendered by a court which had sufficient ground for jurisdiction to do so. To this effect, Article 5(1) of the Judgment Convention provides an exhaustive list of thirteen indirect jurisdictional bases. These connecting factors are generally common in private international law and can also be found in other private international law instruments such as the Brussels I (recast) Regulation. The list includes factors such as the defendant's location of habitual residence or principal location of business, the location of a branch, agency or other establishment, the location of performance of the contractual obligation and the location of the act or omission directly causing harm (Handlungsort).

Notably, a number of widely-accepted jurisdictional bases are missing. For example, a close connection between the claim against one defendant and the claim against another defendant domiciled in the jurisdiction of the court (termed the ''anchor'' defendant) is not listed as an eligible ground for jurisdiction.

Where the Judgment Convention includes the Handlungsort as a connecting factor, it does not provide a basis for the Erfolgsort: the place where the harm occurred as a result of a wrongful act. Another common basis which is lacking in the convention is the jurisdiction of the court in the proceedings on the merits to hear related contribution proceedings.

The Judgment Convention does provide an exception in Article 5(2) which protects consumers in matters relating to a consumer contract, which narrows down the accepted grounds for jurisdiction of the court that issued the original judgment. This fits the increasing protection of consumers nowadays.

Judgments from other contracting states are to be recognised and enforced without a review on the merits, and may only be refused on the basis of the limited grounds for refusal listed in Article 7. Several questions arise in this regard. Refusal can inter alia be allowed if the judgment was obtained by fraud, but should it not be up to the court of origin to decide (in revocation proceedings) whether a fraud in fact took place? That is after all the remedy for alleged fraud in the original case. Another ground for refusal is where the proceedings in the court of origin were contrary to an agreement, or a designation in a trust instrument, under which the dispute in question was to be determined in a court of a state other than the state of origin. This ground could also be problematic; what if the court of origin (in the judgment that is presented for recognition) has already ruled on the agreement and – for example – determined that the parties cannot invoke the choice of forum clause? Will the court of recognition then be able to reassess this judgment, or would that be contrary to the prohibition of a review on the merits laid down in Article 4(2) of the Convention?

Another distinctive element of the Judgment Convention is that punitive damages have been excluded from its scope. According to Article 10, recognition or enforcement may be refused if, and to the extent that, a judgment awards damages that do not compensate a party for actual loss or harm suffered, which would include exemplary or punitive damages.

Furthermore, the Convention does not provide a framework for the proceedings for recognition and enforcement. It only states that the procedure is to be governed by the law of the requested state and that the court should handle the case expeditiously. Notably, appeal and cassation have not been excluded from the proceedings.

Finally, the transitional provision of the Judgment Convention stipulates that the Judgment Convention only applies to the recognition and enforcement of judgments that are rendered in proceedings instituted in the state of origin during the period that the Convention had effect between that state of origin and the requested state. It is therefore safe to say that it will be many years before we can expect the first international enforcement on the basis of the Judgment Convention.

Game changer?

Whether the Judgment Convention will be a game changer in the cross-border enforcement practice therefore remains to be seen. In its press release, the HCCH refers to the Judgment Convention as ''a true gamechanger in international dispute resolution''. The success of the Convention will, however, depend on whether it is ratified by a large number of states; to date, Uruguay is the only state that has done so. If the convention succeeds in attracting as many member states as the New York Convention on the Recognition of Arbitral Awards – which currently has 160 member states signed up – the convention may indeed become an important instrument in the context of international litigation. On the other hand, many countries already enable parties to enforce judgments from abroad on the basis of similar principles and conditions. The real question is therefore to what extent the Judgment Convention actually simplifies and accelerates the procedure.