On October 1, 2015, the Hague Convention on Choice of Court Agreements (the “Convention”) entered into force. The Convention binds Mexico and all members of the European Union, with the exception of Denmark. Even though Singapore and the United States have signed the Convention, they have yet to ratify it. The Convention has also been subject to consultation in Hong Kong and is reported to be under consideration in Australia.
The purpose of the Convention is to create an international legal platform for choice of court agreements similar to the platform established for enforcement of arbitration agreements by the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Indeed, the Convention aims to increase the enforceability of forum selection clauses entered into by parties to international commercial contracts in which they agree to submit their disputes to the courts of a specific nation.
The enforceability of choice of court agreements and judgments rendered under the Convention relies on three pillars: the court which the parties contractually selected must hear the dispute (Article 5), other courts must suspend or dismiss proceedings to which an exclusive choice of court agreement applies (Article 6), and a judgment issued by the chosen court will be recognized and enforced by the courts of other Contracting States (Articles 8 and 9).
It may be useful to note that the Convention does not apply to consumer or employment contracts; a number of other subject matters, including intellectual property rights, insolvency matters, most family matters and tort claims unrelated to a contractual relationship; and interim measures of protection.
By providing greater certainty on jurisdictional issues, court judgments and enforcement between contracting State parties, the Convention thus improves the effectiveness of exclusive choice of court agreements in international litigation and constitutes, in that sense, a step toward international enforcement of judgments rendered under exclusive choice of court agreements for a wide scope of commercial contracts.