The Hague Convention
The Hague Convention on Exclusive Choice of Court Agreements (formerly
the Draft Convention on Jurisdiction and Enforcement of Judgments in Civil and
Commercial Cases)
Last Update:
13-Oct-2005 14:55
What is the Hague Convention?
The Hague Conference on Private International Law is an intergovernmental organization, with 64 Member countries, which was established over a hundred years ago to negotiate and draft multilateral treaties or Conventions in the different fields of private international law. One of the conventions (agreements) under negotiation for a decade, which has just been concluded in June 2005, is the "Hague Convention on Choice of Court Agreements." This convention will create jurisdictional rules governing international lawsuits and provide for recognition and enforcement of judgments by the courts of Member States. Member States, of which the U.S. is one, that ratify the Convention, will be required to recognize and enforce judgments which come within its scope. The library community has been following the development of this convention for several years because of the importance of jurisdictional matters, particularly those concerning contracts and intellectual property rights.
[top]
What is the background of the Convention?
Discussions
on a draft “Convention on Jurisdiction and Enforcement of Judgments
in Civil and Commercial Cases” began in 1992 and several meetings were
held in the years since then to consider varying drafts. Finally, in 2002,
lead delegates from the Hague Conference member countries agreed over the
next year to draft a scaled-down convention based on less controversial "core" provisions.
In March 2003 a small Working Group produced a new, narrower draft treaty
for consideration by the member countries.
In the summer of 2003 the Hague Conference on Private International Law
announced that the member countries had agreed to go forward with trying
to draft a convention that would apply only to cases in which business and
commercial parties have chosen a court (or "forum") in their contract
(so called "B2B contracts"). The draft convention would make such "choice
of court" terms in contracts (including those governing copyrighted
materials, such as software) enforceable if the parties resort to the courts
to settle a legal dispute. The convention would also ensure that judgments
rendered by the courts designated in such agreements are enforced by other
courts. (For example, the assets of a losing party may be in a country other
than the one where the judgment was rendered, making it necessary for the
winning party to have the judgment, awarding money to the winner, enforced
subsequently in another court.)
[top]
Why are libraries concerned about the Convention?
Although
by 2003 the draft convention had been scaled down considerably, many groups,
including libraries and the business community, continue to be concerned
about terms in non-negotiated contracts and licenses, which allow the licensor
to designate in advance which court will hear the parties' disputes. For
example, library groups wrote a letter to the head of the U.S. Delegation
to the Hague Conference in June 2003, setting out library concerns with
the draft convention on choice of court agreements. (See letter of June
13, 2003 in Related Files, below) The library letter pointed out that terms
in non-negotiated contracts and licenses, which allow the licensor to designate
in advance which court will hear the parties' disputes, remain a significant
and controversial issue for many groups, including libraries and the business
community.
Here is an example of how a dispute might come about.
A U.S. library in
a university clicks "I agree" in the process of licensing a database
through the Internet. We would consider this "click-on" agreement
to be a "non-negotiated" license because there is really no opportunity
to change or affect the terms presented on the Web site of the database owner.
The license agreement (contract) requires that any litigation about the license/contract
must be brought in or defended in a particular court distantly located, for
example, in Hong Kong. There is a dispute over the license/contract. For
example, the licensor may take issue with the library's interpretation of
what uses it and its patrons may make in the way of copying, printing, extraction
of data, linking, electronic reserves, preservation, interlibrary loan, etc.,
just to name some common uses. Defending a suit in a distant location (not
to mention the difficulty of dealing with a law that may be unfavorable to
the licensee-library, which is yet another issue) can work extreme hardship
to a non-profit institution. When we agree to such a term as part of a negotiation,
that is one thing. Where there is no opportunity to negotiate the terms of
the "deal," however, we do not think that is the correct outcome.
The convention does not change the underlying substantive law of contracts
of the Member Countries. However, some critics are concerned that contracts
falling under the terms of the treaty (including non-negotiated contracts)
will be more easily enforceable.
NOTE:
Although some language in the final
Convention (see below) is helpful in addressing the concerns about non-negotiated
contracts, these issues and others remain. For further background on the
controversy surrounding non-negotiated "shrink-wrap" or "click-wrap" contracts,
turn to our UCITA pages. One proposed provision in the amendments to Article
1 of the Uniform Commercial Code, which began circulating in state legislatures
in 2002, reflects the same kind of thinking about choice of forum and choice
of law clauses seen in the original drafting of UCITA.
[top]
What is the status of the Convention?
In 2001 ALA requested the Department
of State to include a library representative on the U.S. Delegation to The
Hague. In 2003, the State Department agreed to have an ALA representative
participate as a Private Sector Advisor on the U.S. Delegation at a special
meeting in The Hague, December 1-9, 2003; that meeting resulted in a new
draft convention on choice of court agreements. Another special meeting was
held in The Hague in April 2004, producing yet another draft of the convention.
A Diplomatic Conference to approve the final treaty was convened in June
2005.
To address the concern that the Convention would make choice of court terms
in so-called “click-wrap” contracts more easily enforceable,
a number of groups - prior to the Diplomatic Conference - had pressed for
an exclusion from the scope of the convention. That is, they asked for an
express provision that non-negotiated contracts, such as shrink-wrap and
click-on agreements, would not be covered by the convention. Ultimately,
however, the pressure from software and copyright industries in the US and
abroad to include non-negotiated contracts was more effective. As concluded
in a diplomatic conference on June 30, 2005, the convention contains no such
express exclusion. (The convention, which now must be ratified by Member
Countries of The Hague Conference, is available on the Hague Conference Web
site at: http://www.hcch.net/index_en.php?act=conventions.text&cid=98.)
Thus, any relief for US businesses and institutions from the enforcement
of choice of court terms in non-negotiated agreements of an international
nature will have to come from other provisions of the convention itself (the “escape
clauses” are quite limited, see below), from implementing legislation,
or from opposition to ratification of the convention.
The Convention on Choice of Courts Agreements is available on the Hague
Conference web page:
http://www.hcch.net/index_en.php?act=conventions.pdf&cid=98
Here are the highlights of the Convention that are most pertinent to libraries.
The convention is intended to provide certainty that courts have jurisdiction
to hear disputes between business and commercial parties who have entered
into a contract ("B2B contracts") and that the courts of other
countries will recognize and enforce the judgments issued by those courts.
- The convention applies to commercial contracts that specify that if
there is a dispute between the parties to the contract, the proceedings
will be heard and decided by a particular court (or the courts of one particular
country). Such clauses or agreements in contracts are called "exclusive
choice of court" agreements.
- Commercial contracts for copyrighted materials are covered by the convention.
The convention does not apply to proceedings that mainly concern a dozen
other specified matters including the validity of other intellectual
property rights.
- An earlier draft of the convention contained an Article 3 ("Formal
Validity")
that seemed to suggest that any choice of court clause meeting the requirements
set out in the article would be considered a valid contract. (See libraries'
letter of June 13, 2003 in Related Files below)
That article has been eliminated in an attempt to remove that confusion.
Whether an underlying contract is substantively valid - for example, whether
one party has assented to certain terms - is left up to the law of the
court hearing the dispute. The convention requires only that the choice
of court agreement be in writing (including electronic).
- The general rule, with exceptions, is that the court chosen in the parties'
agreement should hear the dispute brought before it.
- The general rule is that if the dispute is brought before another court
(other than the one designated in the agreement), that court will decline
to hear the case. Again, there are exceptions, including that "the
agreement is null and void under the law of the State of the chosen court" and
that "giving effect to the agreement would lead to a manifest injustice
or would be manifestly contrary to the public policy of the State of the
court seised."
These types of escape clauses are important for parties
who want to challenge the enforcement of a choice of court clause. However,
the language sets a high bar and it is unclear whether these provisions will
be available except in extraordinary cases. (See libraries’ letters
of March 2004 and April 2005 in Related Files below.)
- The general rule - with some exceptions - is that once the court designated
in the exclusive choice of court agreement has issued a judgment, that
judgment will be recognized or enforced by other courts of the Hague
Member Countries.
[top]
Who else has been involved in these meetings on the draft?
The other stakeholders
that have been participating in these meetings over the past few years are
the technology industry, including internet service providers (ISPs); the
copyright content industry; and consumer protection organizations. There
have been many issues raised on behalf of consumer protection groups, which
have studied the draft Convention and been very active in addressing these
issues. See, for example, http://www.cptech.org/ecom/jurisdiction/hague.html.
ISPs have expressed concern that the treaty could accelerate a trend of foreign
countries claiming jurisdiction over U.S. web sites, such as in the recent
controversy involving Yahoo! In that case, a French court ordered Yahoo!
to prevent web users in France from accessing a site containing racist materials.
Under the draft treaty, a U.S. court could refuse to enforce the French judgment
only under very limited conditions, for example, if the American court found
that enforcement would be “manifestly incompatible” with the
public policy of the U.S. (such as embodied in our First Amendment). Other
countries that were signatories of the treaty, however, might well enforce
the French court judgment.
[top]
|
