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International Jurisdiction and Foreign Judgments in Civil and Commercial Matters Hague Conference on Private International Law Enforcement of Judgments Prel. Doc. No 7 (French text omitted) April 1997

By Catherine Kessedjian

Preliminary Document No 7 of April 1997 for the attention of the Special Commission of June 1997 on the question of jurisdiction, and recognition and enforcement of foreign judgments in civil and commercial matters.

Permanent Bureau of the Conference, Scheveningseweg 6, 2517 KT The Hague, Netherlands

[note: This document was reformatted for HTML. The text remains the same.]

Introduction

1    A feature peculiar to private international legal relations is the presence of a number of complicating factors which are absent from purely internal relations. The phenomenon of borders, which arises as soon as lawyers have to decide whose law is to apply, becomes problematic when it comes to deciding which court has jurisdiction to adjudicate in a case, what will be the effects of its decision and, in general, how to resolve the various procedural issues.

2    This is why the Hague Conference, among its various fields of work, has always accorded a place of importance to questions associated with judicial private law. This pride of place is evident from the numerous conventions in which, from the outset, the main or secondary theme is jurisdiction or civil procedure.¹

3    The list of work prepared by the Conference on the subject of the recognition of foreign judgments, as reviewed in the Explanatory Report by Mr Charambalos N. Fragistas in connection with the Convention of 1 February 1971 on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters² is impressive. We need only mention the model Convention prepared during the Fifth and Sixth Sessions (1925 and 1928) which has inspired many bilateral conventions; the Convention of 15 April 1958 concernant la reconnaissance et l'exécution des décisions en matière d'obligations alimentaires envers les enfants, drafted in the course of the Eighth Session (1956); the Convention of 15 April 1958 sur la compétence du for contractuel en cas de vente a caractère international d'objets mobiliers corporels, drafted during the Eighth Session (1956); the Convention of 25 November 1965 on the choice of court, drafted at the Tenth Session (1964)³ and the Convention of 2 October 1973 on the Recognition and Enforcement of Decisions Relating to Maintenance Obligations, drafted during the Twelfth Session (1972).⁴

4    The experts to the Conference have focused on several occasions on the question of jurisdiction. It is sufficient to recall, for instance, that at the meeting of 30 October 1951, on a proposal by Mr Julliot de la Morandière, they decided to request a study on civil jurisdiction in international sales and on the rules for enforcement in cases of choice of jurisdiction.⁵

5    We also know that the work on recognition and enforcement of judgments and in the matter of contractual choice of court began with the decision voted during the Ninth Session of the Conference⁶ and led to the Convention of 1 February 1971 on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters and its additional Protocol.⁷

6    Although there have been so many studies during the lifetime of the Conference, except in the area of family law, none has really proved satisfactory. Some of the texts prepared have come into force, but with only a small number of Contracting States, such as the Convention on the enforcement of judgments and its Additional Protocol on Jurisdiction, which have been ratified only by Cyprus, the Netherlands and Portugal.

7    It is valuable, we think, to look for the reasons why these Conventions, especially the 1971 Convention, have proved unsuccessful. Two main reasons were put forward by the Permanent Bureau in Preliminary Document No 17 of May 1992⁸ "1) the success of the Brussels Convention (which built to a large extent on the Hague Convention and was negotiated in part by the same persons), followed by the Lugano Convention, and 2) its unusual, complex form: Convention, Protocol of the same date and Bilateral Supplementary Agreements". The excessively complex formal structure of the 1971 Convention which, with its Additional Protocol and its method of bilateralisation, actually requires States Parties to negotiate supplementary agreements, and the "vagueness" of the points specified in Article 23,⁹ are certainly pitfalls to be avoided in the future work of the Conference.

8    Important though these reasons may be, and admittedly they may be crucial, we believe there is a further substantial reason underlying the lack of success of the 1971 Convention. If we consider the needs of litigants in international litigation, we see that although it is vital to secure for a judgment obtained in any one country effects in one or more other countries, the first priority is to ascertain which court has international jurisdiction to adjudicate initially on the merits of the case. This, we believe, is by far the most important question for litigants. A claimant wants to be able to take action speedily, in a court close to him and whose rules are familiar to him, in order to protect the rights which he enjoys or thinks he ought to enjoy. As for the defendant, he does not want to have to defend the suit in a court far away from the centre of his personal or economic interests, and he wants the court dealing with the case to uphold his right to adversarial proceedings which respect to the fullest the right of defence. In our view, therefore, the issue is much more one of direct jurisdiction¹⁰ than of the recognition and enforcement of judgments.¹¹

9    It seems beyond doubt that the Brussels Convention and its sister instrument, the Lugano Convention, have enjoyed the success they have because, regardless of their binding character in the context of "building Europe",¹² they have one common characteristic by comparison with the endeavours of the Hague Conference: they are double conventions, in the sense that they primarily define direct jurisdiction of courts in the subjects with which they deal, treating this as a vital preliminary to the effects which arise from the resulting judgment; these effects, it has to be conceded, are merely the natural extension of such competence. It is because the court which has dealt with the merits of the case possesses jurisdiction (usually by virtue of the Convention, failing some mistake on the part of the court seised), that its judgment will, except in limited exceptional cases, take effect on the territory of all the other States Parties.

10    In that respect, it is useful to recall that, within the framework of the Organisation of American States, the Montevideo Convention of 8 May 1979¹³ on the extraterritorial validity of foreign judgments and arbitral awards is a simple Convention. Today, this instrument is in force in the following countries: Argentina, Brazil, Colombia, Ecuador, Mexico, Paraguay, Peru, Uruguay and Venezuela. It was complemented by the La Paz Convention of 24 May 1984¹⁴ on international jurisdiction for the extraterritorial validity of foreign judgments providing for rules of indirect jurisdiction which, although widely signed, has only been ratified by Mexico and, thus, has not entered into force.

11    Within NAFTA, the States Parties have preferred arbitration for dispute resolution. As regards ASEAN, for the time being, there is no convention binding the States Parties¹⁵ but one author has already recommended that such a project be undertaken which, at first, could be limited to the effects of judgments although bearing in mind the "model" of the Brussels and Lugano Conventions.¹⁶

12    But neither should we ignore one further reason for the lack of success achieved in this area, one which has to do with the particular character of the enterprise. As Mr Fragistas pointed out in his Explanatory Report on the 1971 Convention: The recognition of foreign judgments presupposes that confidence is placed not only in the law as applied by the foreign court, but also in the ability and the integrity of the judges who have handed down the judgments, and even in the factual circumstances in which proceedings are held in the country of origin of the judgment States place great emphasis on the origin [of the foreign judgment], i.e., of the country in which it was delivered. This is why they are reluctant to apply to the treatment of foreign judgments an egalitarian system which would apply without distinction to all foreign judgments, from whichever country they originate.¹⁷

13 The same idea underlies some of the doctrinal writings on this topic, when they assert that the recognition and enforcement of foreign judgments impinges on State sovereignty. In fact, it is not the recognition and enforcement themselves which cause the difficulty, but the fact that the court addressed implicitly recognises that the merits of the case were "better" adjudicated, in a procedural sense, by the court of origin, and hence that court was "more appropriate".¹⁸ By the same token, one may doubt that comitas gentium is a valid and efficient basis for the national decisions in matters of international jurisdiction or effects of judgments.¹⁹

14    In this connection, it is revealing to compare the system set up for the recognition and enforcement of arbitral awards by the New York Convention of 1 June 1958²⁰ with the lack of a generalised system for foreign judgments. Once States have decided that their sovereignty is not under threat from the growth in forms of private justice such as arbitration, they lose virtually all interest in the outcome of the award, in the sense that it is not considered liable to impinge on this celebrated sovereignty unless, exceptionally, through considerations of public policy. Moreover, it is clear that the very significant expansion of arbitration, especially in international litigation in commercial cases, is partly due to the fact that there is no multilateral instrument for foreign judgments akin to the 1958 New York Convention. However, modern-day practitioners of international trade admit that arbitration, despite all its positive features, is not always the ideal method of settling disputes; some cases do not lend themselves to an arbitration procedure.

15    Hence national courts still have a very important role to play in private international relations. Litigants should be able to predict with a significant degree of certainty which court has jurisdiction to adjudicate in a dispute which will arise or has already arisen. They must also be able to benefit from all the levels of jurisdiction available on the territory of the country in which the case has been decided on its merits; but afterwards, they must benefit from the effects of the judgment, in other States if necessary, and without having to start again with cumbersome and complex proceedings. As common law lawyers say, everyone is entitled to their "day in court", but once this right has been exercised before a given jurisdiction, the litigant concerned must not be allowed to bring suit afresh, even in the courts of a foreign State. This is a matter of saving public funds, which are becoming ever tighter, and of ensuring the proper administration of justice, which must not stop at the territorial borders of States, since everyone faces the same difficulties in achieving the effective organisation (in terms of both time and money) of the public legal services.²¹

16    This is why it is useful to bring the issue back to the drawing-board and to design a new multilateral Convention for this purpose. The needs of international trade, the ever-growing interrelation of international economic activities and their greater complexity in comparison with the situation which existed thirty years ago, call for a new structure of international litigation that arbitration cannot furnish as and by itself. In addition, the ever more frequent occurrence of mass tort actions in matters of products liability, environment or banking, to cite only but a few examples, calls for truly international solutions. Indeed, it is not infrequent that several courts are simultaneously requested to adjudicate in actions arising from the same facts or juridical acts. Likewise, a number of jurisdictions have developed an extensive understanding of their international jurisdiction. To face those situations, a legal norm collectively created by States within the ambit of the Hague Conference, seems to be the most adequate.

17    The origin of the endeavours now in progress at the Hague Conference on private international law lies in a proposal by the United States, in the letter from the Legal Adviser dated 5 May 1992, to which the Permanent Bureau refers in Preliminary Document No 17 of May 1992.²² This proposal was discussed at the meeting of the Special Commission on General Affairs and Policy of the Conference which met from 1 to 4 June 1992, and which resulted in a decision to set up a small Working Group; this group met at The Hague from 29 to 31 October 1992.²³

18    The Group unanimously agreed that it was desirable to seek to negotiate, within the Hague Conference, a multilateral Convention on the recognition and enforcement of judgments.²⁴ The Group also recognised that a simple Convention, such as the 1971 Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters, would be insufficient²⁵ even though, in the wider context of the Conference, it was felt that a full double Convention²⁶ would be too ambitious. It therefore expressed a "preference for a convention which would offer some of the advantages of a double convention, while at the same time having a greater degree of flexibility than that available with a convention of the Brussels/Lugano type".²⁷

19    The following points were discussed by the Working Group, and its Conclusions can be summarised accordingly:

-- the Convention should be a double instrument, but possibly including a non-exhaustive white list (mixed Convention),²⁸ a system which was preferred by the Working Group;

-- the State addressed would have authority to control the grounds of jurisdiction;

-- the scope of the instrument should be confined to civil and commercial matters, but this concept must be clarified. It is possible that questions relating to the status of individuals would be excluded;

-- a certain number of jurisdictional bases were reviewed, roughly following the model of the Brussels Convention. Similarly, the excluded bases of jurisdiction were reviewed in the light of the list contained in the Brussels Convention. Special attention focused on the ground of jurisdiction, known in English as doing business, and which could be translated by entreprendre des activités commerciales.²⁹ The Working Group did not reach agreement as to whether this ground of jurisdiction should be included in the list of grounds of exorbitant jurisdiction, use of which would be prohibited for the purposes of the Convention.³⁰

20    After a full and absorbing discussion within the First Commission³¹ the Seventeenth Session of the Conference decided to include in the agenda of the Conference the question of recognition and enforcement of foreign judgments in civil and commercial matters. It asked the Secretary General to convene a Special Commission, as soon as is feasible, "charged with studying further the problems involved in drafting a new Convention, on the basis of a document prepared by the Permanent Bureau, taking into account the discussions of the Seventeenth Session; making proposals with respect to the work which might be undertaken; suggesting the timing of such work."³²

21    In line with this decision, the Secretary General called a meeting of a Special Commission from 20 to 24 June 1994, to discuss the following points: the nature of any future convention; the substantive scope of a Convention; grounds of direct jurisdiction which might be included; other grounds of jurisdiction; grounds of jurisdiction which should not be used as bases of general jurisdiction; the application of jurisdictional rules; the recognition and enforcement of decisions; and the procedure for recognition and enforcement.³³

22    On the basis of these discussions, the content of which will be further considered below, the Special Commission, in the light of a proposal by four delegations,³⁴ concluded that it would be "advantageous to draw up a convention on jurisdiction, recognition and enforcement offoreign judgments in civil and commercial matters and recommended that the Special Commission on General Affairs and Policy of the Conference propose this question to be included in the Agenda for the future work of the Conference at the Eighteenth Session".³⁵

23    The Special Commission also decided on the future timetable of work. It took the view "that it would be useful for the Commission to be convened again before the Eighteenth Session in order to examine certain questions in more detail on the basis of new documents prepared by the Permanent Bureau and expressed the wish that the Special Commission on General Affairs and Policy of the Conference takes a decision to that effect".³⁶

24    In June 1995, the Special Commission on General Affairs and Policy of the Conference reiterated the importance of the subject; heard a statement by the Expert for France, on behalf of the Member States of the European Union; welcomed the statement, and invited the Permanent Bureau to make a further study in preparation for a meeting of a new special preparatory commission, which was to meet in 1996.³⁷

25    This meeting took place from 4 to 7 June 1996. The key questions discussed related to the possibility of the court declining jurisdiction (theory of forum non conveniens, lis alibi pendens, related actions); judgments awarding excessive or multiple damages; the criteria for the court addressed to control the decision of origin (the jurisdiction of the court of origin; the law applied by the court of origin; the procedure followed and the right of defence; the public policy of the State addressed, especially with regard to judgments rendered by default; the independence and impartiality of the court of origin); and the scope of application of the Convention.³⁸

26    The Eighteenth Session decided to include on the agenda of the Nineteenth Session the question of jurisdiction, of recognition and the enforcement of judgments in civil and commercial matters.³⁹ The Secretary General accordingly convened a Special Commission to be held from 17 to 27 June 1997, for which this Preliminary Report has been written.

27    This Report will deal with the substantive issues in the logical order in which they are to feature in the future Convention, i.e., its substantive and geographical scope (Chapter I), direct jurisdiction (Chapter II), the recognition and enforcement of the judgment (Chapter III), implementation and uniform interpretation (Chapter IV).⁴⁰

CHAPTER I -- SCOPE OF THE CONVENTION

28    The Convention will apply in international litigation, i.e., in cases between parties who are all subjects of private law, or who are acting for private activities. This would exclude all cases between a State or a State entity, or any other entity acting on behalf of the State in public service missions.⁴¹ Probably, the Convention will not contain such a definition but the Explanatory Report could say something about this question which takes greater actuality with the massive privatisation trend which we witness today. In that respect, one may question whether the distinctions proposed by the European Court of Justice in the Eurocontrol⁴² and Rüffer⁴³ cases and the elements to be considered to apply these distinctions are adapted to the present evolution.

29    There are several possible definitions of the concept of "international litigation". First, a litigation may be regarded as international if it relates to a subject, an action or a cause which is itself international. For instance, if the case relates to a contract, it will be international if the contract is itself an international one. However, it is possible for an international litigation to arise from a purely national activity. For example, in the context of a purely domestic contract, a dispute may arise at a time when one of the parties is located⁴⁴ abroad. This will also be the case if damage is sustained beyond a national border, although the whole of the activity originally took place in the domestic arena. Finally, a case may also be international because it involves different legal or judicial systems, the points of contact of the dispute being situated on more than one national territory, as is the case when a foreign judgment must develop effects on a territory other than that where it was rendered although, at the outset, the litigation was purely internal. In view of these various possibilities, it would be preferable for the Convention not to provide a definition, thus leaving it to the court dealing with the case to decide, in the light of the circumstances, whether it is an international one. Moreover, the omission of any definition of the international character of the litigation concerned is in line with the tradition followed by the Hague Conventions.

30    On the contrary, two questions will probably have to be discussed at a very early stage by experts to the Special Commission. These are the substantive scope of the Convention (Section 1) and its geographical scope (Section 2).

Section 1 -- substantive scope

31    The preparatory work of the Working Group and of the two Special Commissions has shown that, despite unanimous agreement in principle that the Convention should apply to "civil and commercial matters", in practice the question is rather more complicated. As a result of the work of the Special Commission in June 1994,⁴⁵ it appears to be settled that the following should constitute exceptions:

-- civil status and capacity of natural persons;
-- matrimonial property regimes;
-- wills;
-- succession to the estates of deceased persons;
-- bankruptcy and other similar procedures;
-- social security;
-- arbitration.

32    These are excluded either because they are covered by other international instruments⁴⁶ or because they raise particular problems and thus require a special regulatory framework of their own.

33    In the following discussion, we will confine ourselves to the subjects which have still to be discussed subsequent to the work of the Special Commissions of June 1994 and June 1996, to which we have already referred.

§ 1 -- proceedings involving pecuniary interests

34    In the light of the comments in the introduction to this section, the Convention would deal only with proceedings involving pecuniary interests; it would therefore exclude most questions covered by family law,⁴⁷ except perhaps those relating to maintenance obligations.⁴⁸

35    However, the inclusion in the future Convention of proceedings concerning maintenance obligations may prove problematic, especially in view of the existence of the two Hague Conventions of 15 April 1958 on the recognition and enforcement of decisions concerning maintenance obligations for children, now in force in 18 Member States⁴⁹ of the Conference and one non-Member State,⁵⁰ and the Convention of 2 October 1973 on the Recognition and Enforcement of Decisions Relating to Maintenance Obligations, now in force in 17 Member States of the Conference.⁵¹ Whereas the 1958 Convention is restricted solely to maintenance obligations towards children, the 1973 instrument covers both these and obligations towards adults, including maintenance obligations between spouses or ex-spouses. The two Conventions are framed according to the model of so-called "simple" conventions, adopting as the main ground of indirect jurisdiction the court of the maintenance creditor, i.e., the forum of the plaintiff.

36    Both the Brussels and the Lugano Conventions cover maintenance obligations, providing for direct jurisdiction grounds for proceedings of this kind. Alongside the general jurisdiction of the domicile of the maintenance debtor, the defendant to the action (Article 2), the Conventions also confer jurisdiction on the courts of the creditor's domicile (Article 5.2). Jurisdiction grounds as provided for in the Brussels and Lugano Conventions have the following result: the maintenance creditor has a choice when he or she wants to go to court to obtain a maintenance order, but the maintenance debtor has no such option; if he or she wants to take out proceedings to amend a maintenance order, according to the Brussels and Lugano Conventions the only court open is that of the maintenance creditor, defendant to the action (Article 2); he or she cannot use the forum prescribed in Article 5.2, not being the creditor of the maintenance.

37    We can therefore see that the direct jurisdiction with regard to maintenance obligations introduced by the Brussels and Lugano Conventions is in harmony with the Hague Conventions of 1958 and 1973, and there seems to be no conflict between the two systems. Moreover, the Hague Conventions specifically state that they give way to any other instrument which may be invoked in order to obtain recognition and enforcement (Article 23 of the 1973 Convention, Article 11 of the 1958 Convention), where as the Brussels and Lugano Conventions specify that their provisions may be replaced by those of any convention on a specific subject to which the State of origin and the State addressed are Parties (Article 57). Given this mutual renvoi provision, it is ultimately for the parties to opt for enforcement under either the Hague Conventions or the Brussels and Lugano Conventions.⁵²

38    Finally, we note that the Inter-American Convention on support obligations, prepared under the auspices of the Organisation of American States (OAS) and concluded at Montevideo on 15 July 1989 - a Convention which has so far been ratified only by Mexico and Guatemala - also establishes direct jurisdiction in this field. Article 8 provides that the creditor may choose among various competent judicial or administrative authorities:

a   those of the State of domicile or habitual residence of the creditor;
b   those of the State of domicile or habitual residence of the debtor; or
c   those of the State to which the debtor is connected by personal links, such as possessing property, receiving income or obtaining financial benefits. 39    The decision to include maintenance obligations in a future worldwide Convention raises a serious difficulty, since some States make a habit of refusing, as a matter of principle, to admit the forum of the plaintiff. If the attitude of these States proves unshakable, the only alternatives open to the negotiators of the future Convention would apparently be:

a    for the future Convention to apply to proceedings concerning maintenance obligations, but providing direct jurisdiction only for the forum of the maintenance debtor or for one which the defendant has accepted either expressly, or by pleading the merits without reservations as to jurisdiction. However, this would be a retrograde solution by comparison with the two Hague Conventions, a regrettable backward step which would raise a serious conflict of laws;

b   for maintenance obligations to be excluded from the scope of the future Convention. § 2 -- tort

40    It may seem strange to ask whether the future Convention should deal with the issue of civil liability in tort. However, the problems arise not so much from the subject-matter itself, as from the complexity of some of the disputes engendered by it, and the content of the judgments involved.⁵³ In fact, where the tort concerns only one perpetrator and one victim, and the legal relationship remains strictly two-sided, it is relatively easy to find a jurisdictional rule. The difficulties caused, even under this scenario, by a mobile conflict (where the victim moves and the damage worsens after the move) can also be resolved.⁵⁴ Likewise, a rule may be relatively easily tailored for "distant torts" when its effects are felt at several points of impact even though there is only one victim. If the topic of civil liability in general were omitted from the future Convention, it would be deprived of much of its usefulness.⁵⁵

41    On the other hand, disputes involving a multiplicity of parties (often the victims), all of whom want to take proceedings in their own courts, are much more problematic; the defendant being compelled to defend his interests in many different jurisdictions. If the Convention is also to cover these cases of multiple litigation in cases of tort or quasi-tort, thought should be given to including, perhaps, a clause providing for a different ground of jurisdiction than the one chosen in cases where there is only one claimant and one defendant.⁵⁶ Indeed, the balance of competing interests is not the same in the two instances. This difference means that there must be a separate solution for each kind of cases.

42    A further issue arises with collective actions where there is joint representation, or collective applications for restraining injunctions, such as may occur under the law on product liability, environmental law and, in general, under consumer law. From the claimant's point of view, these collective actions may be complicated still further by the need to sue a number of different defendants. This will be the case, for instance, where there is an air crash and liability has to be determined as between the airline, the pilot, the various control tower operators involved, the aircraft manufacturers and/or of some of the plane's components. If these actions were to be excluded a priori from the scope of the future Convention, we feel this would seriously undermine its practical usefulness. Such actions will in fact be dealt with mainly by national courts, as arbitration is unsuitable for proceedings of this kind. It cannot offer an appropriate solution for such disputes, which must always remain within the jurisdiction of national courts. The work done in drafting the future Convention is an ideal framework for attempting solutions to questions which are undeniably extremely complex. But the difficulty of the issues encountered should not prevent us from seeking a solution.

43    As regards actions brought under environmental law, one might be tempted to exclude them because the Eighteenth Session of the Conference decided "to retain in addition in the Agenda for the work programme of the Conference the question of the conflict of jurisdictions, applicable law and international judicial and administrative co-operation in respect of civilliability for environmental damage".⁵⁷ The initial preparatory work on the subject by the Permanent Bureau shows that issues of environmental damage raise complex problems, which call for global solutions with regard to conflicts of jurisdiction, the applicable law and co-operation.⁵⁸ Having said this, it would seem a matter for regret if the future Convention on jurisdiction and the effect of decisions were wholly to exclude actions for damages incurred as a result of environmental harm. Nor should actions for restraining injunctions be excluded; in this area, they are not dealt with by specialised jurisdictions. It would be sufficient that the future Convention remain silent on the subject, neither excluding nor expressly including environmental law, so that future litigation in this field would proceed according to the rules of the Convention, provided the rules are framed to enable these cases to be covered. These provisions would be adopted without prejudice to decisions taken when the Conference places on its agenda the preparation of the special Convention on the environment. In any event, the latter Convention, being in the nature of a lex specialis, is perfectly capable of offering solutions different from those adopted for the general Convention now in preparation. Moreover, the work impending in the context of the future Convention on jurisdiction and the effects of judgments will undoubtedly help to advance the work on the environment Convention. We therefore suggest that this topic should not be excluded from the substantive scope of the future Convention.

§ 3 -- competition law⁵⁹

44    Certain misunderstandings have arisen in the past when discussing whether to include within the scope of the future Convention questions relating to competition. There are in fact two different issues: 1) actions brought under competition law stricto sensu, usually applications for restraining injunctions, which mostly fall within the purview of independent administrative authorities, and which have their own rules of procedure with a grouping of litigation both at first instance and on appeal before specialised courts; 2) actions for damages in contract or tort, brought by an economic operator against his contractual partner or one of his competitors, and relying either on a breach of competition law stricto sensu or on what is traditionally known as unfair competition. Although it has to be recognised that the two areas of law, competition law stricto sensu and the law on unfair competition, are akin in many respects as far as their economic objectives and key principles are concerned,⁶⁰ they are clearly separate as regards litigation cases and the nature of the cases brought.

45    As for the first category, i.e., competition law stricto sensu, it would be useful to make the effort to define rules which would offer a criterion for international jurisdiction, especially the precise meaning of the so-called theory of "effect". In any event, in this area as in others, judicial co-operation is required. Increasingly, activities by economic operators bring into play the competition laws of several States at once. Hence there is a clear need for improved co-ordination of the international jurisdiction of the specialised courts in these various States, so as to avoid a plurality of actions or, if these are inevitable, to authorise courts to work together and thus avoid burdening operators with irreconcilable decisions.⁶¹ This judicial co-operation is normally transnational, because of the dispersed character of competing economic activities. Moreover, it is quite possible that the future Convention, if it includes provisions on co-operation, will offer certain guidelines and pointers to the courts dealing with issues of competition law stricto sensu. However, as these proceedings are often of an administrative or quasi-administrative kind, it would perhaps be preferable to exclude them⁶² or, at least, not to include them specifically.

46 Finally, purely civil law actions for damages, brought by one operator against another, based on a breach of competition law or acts of unfair competition, are not by nature different from any other kind of action for tort⁶³ or contractual liability. There is no particular reason to exclude these actions as such from the scope of the future Convention, and it is not particularly relevant whether they are based on competition law. It is not even certain that specific criteria for an appropriate form of jurisdiction in such cases would be useful, although, for the sake of argument, we will be putting forward some ideas on this subject.⁶⁴ Is it desirable to define the frontier which divides this class of proceedings from the former class mentioned above? The Special Commission which met in June 1996 suggested that such a definition can perhaps be given "through the intermediary of a precise definition of the concept of the court"⁶⁵ dealing with the case, and by defining the concept of an "action for breach of competition law". On reflection, we think it is preferable not to encumber the text of the Convention and, as for environmental issues, neither exclude nor include expressly competition within the substantive scope of the instrument, leaving the courts to make the appropriate delimitation in the light of the cases submitted to it.

§ 4 -- fiscal matters, customs duties and fines

47    In civil law countries these topics have always been treated as a matter of public law, whereas in common law countries, which do not distinguish between private and public law, tax law in particular belongs to the "civil law".⁶⁶ These matters are not included in the Brussels and Lugano Conventions. The Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters, concluded on 1 February 1971, also provides that the Convention does not apply to "decisions for the payment of any customs duty, tax or penalty".⁶⁷

48    It must be remembered that these matters are usually covered by a clause, albeit a general and relatively binding one, on judicial and administrative co-operation in the recovery of such duties, taxes and fines, by means of many bilateral conventions on taxation and establishment which States have concluded over a period of more than thirty years. This network of substantive conventions is now so dense that it would probably be undesirable to introduce new rules, which would only upset the working of the co-operation arrangements already in existence among the tax authorities of the various States. For this reason, we think it would be wise to exclude these subjects from the scope of the future Convention. § 5 -- intellectual property

49    As in the case of competition law, the Special Commission was very reluctant, in June 1996, to include this topic in the future Convention.⁶⁸

50    However, as with competition law, it is not so much the subject itself but certain actions associated with intellectual property rights which ought to be included. We will consider these actions below when dealing with the grounds of direct international jurisdiction.⁶⁹ Thus, we think that, as for matters referred to in preceding paragraphs, no specific exclusion should be included in the Convention.

§ 6 -- provisional or protective measures 51    The Special Commission concluded, in June 1996, that it was probably appropriate to include one or several clauses on these measures.⁷⁰ We emphasise the importance of these measures in international litigation, as the direction and outcome of the proceedings on the merits will often depend on them.⁷¹ In our view, if it is to be useful the Convention must include such provisions, and we will suggest below some of the lines they might take.⁷²

section 2 -- geographical scope

52    Here we come to one of the most difficult issues involved in the preparation of the future Convention. The first question which arises is the criterion or criteria for applying the Convention. Being a Convention which will comprise direct forms of jurisdiction, it will have to be applied primarily by courts dealing with cases which involve a foreign element. It would be unthinkable for the Convention to apply if the court seised is not situated on the territory of a Contracting State. But if the Convention is to include rules for cases of lis pendens, for choice of court clauses and for the enforcement of decisions, the criteria for its application will have to be examined separately for each of these.

53    Moreover, as we know the Brussels and Lugano Conventions, for all jurisdictional rules except those on exclusive jurisdiction and the validity of clauses on choice of court, apply only where the defendant is domiciled on the territory of a Contracting State. This restriction on the applicability of the Brussels and Lugano Conventions is not entirely satisfactory, and is the source of frequent criticism of the two instruments, which leave to non-treaty law all actions brought against defendants not domiciled on the territory of a Contracting State.

54    But the criteria chosen for applying the future Convention must enable it to be applied in a harmonious and distributive manner with the Brussels and Lugano Conventions, avoiding conflicts of treaties. This is why, after due reflection, it was felt that the future Convention should not be modelled on the general criterion for applying the Brussels and Lugano Conventions. This would make it possible to find ready and harmonious solutions, such as those suggested below. 55    As regards all the rules of direct jurisdiction (except for lis pendens) the only criterion for geographical application of the new Convention should be the one proposed above, i.e., that the court seised should be situated on the territory of a Contracting State.⁷³ In relation to the Brussels and Lugano Conventions, its application will be distributed as follows:

C.S. = N.C. )
N.C.
D. = N.C. )
C.S. = N.C. )
N.C.
D. = B/L )
C.S. = N.C. + B/L )
B/L
D. = B/L [with or without N.C.] )
C.S. = B/L )
Non-treaty law of C.S.
D. = N.C. and outside B/L )
C.S. = N.C. + B/L )
N.C.
D. = outside B/L )
C.S. = B/L )
Non-treaty law of C.S.
D. = outside B/L and outside N.C. )
C.S. = Court seised
D. = Defendant
N.C. = Contracting State of the new Convention
B/L = Contracting State of Brussels and/or Lugano

In a way, this system amounts to saying that the new Convention replaces the non-treaty law of the State of the court seised with regard to direct jurisdiction.

56    As regards lis pendens, the Convention must provide that it will apply only if the two courts between which there is a lis pendens are situated in two Contracting States of the new Convention. Consequently, the application of the new Convention and of the Brussels and Lugano Conventions will be distributed as follows:

C₁ = N.C. )
N.C.
C₂ = N.C. )
C₁ = N.C. + B/L )
B/L
C₂ = N.C. + B/L )
C₁ = N.C. + B/L )
N.C.
C₂ = N.C. )
C₁ = B/L )
Non-treaty law of C₁ for C₁ and of C₂ for C₂
C₂ = N.C. )
[except where there is a bilateral agreement between C₁ and C₂]⁷⁴
C₁ = N.C. )
Non-treaty law of C₁ for C₁ and of C₂ for C₂
C₂ = B/L )
[except where there is a bilateral agreement between C₁ and C₂] ^*
C₁ = Court [first] seised
C₂ = Court [second] seised
N.C.= Contracting State to the new Convention
B/L = Contracting State to the Brussels and/or Lugano Conventions

57    As regards the choice of court clauses, the criterion for application should, again, be the same as for the rules of general jurisdiction, i.e., that only the court seised which has to decide on the validity of a choice of court clause has to be situated on the territory of a Contracting State. This rule would apply whatever the location of the chosen court and even if the court seised is not the court chosen. In relation to the Brussels and Lugano Conventions, the application of the new Convention would be as follows:

C.S. = N.C. )
C.C. = B/L ) N.C.
P. = B/L )
C.S. = B/L )
C.C. = N.C. ) Non-treaty law of C.S.
P. = B/L or N.C. )
C.S. = B/L + N.C. )
C.C. = B/L [+ N.C.] ) B/L
P. = B/L [+ N.C.] )
C.S. = Court seised
C.C. = Chosen court
P. = One of the parties to the choice of court agreement
N.C. = Contracting State to the new Convention
B/L = Contracting State to Brussels and/or Lugano

58    Finally, as regards the enforcement of decisions, preference should be given to the criterion whereby the State of origin and the State addressed must both be contracting parties to the new Convention in order for its provisions on the recognition and enforcement of decisions to apply. The distribution as between the new Convention and the Brussels and Lugano Conventions will then be as follows:

S.O. = N.C. + B/L )
N.C.
S.A. = N.C. )
S.O. = N.C. )
N.C.
S.A. = N.C. + B/L )
S.O. = B/L + [N.C.])
B/L
S.A. = B/L + [N.C.])
S.O. = B/L ) Non-treaty law of S.A. except where there is a bilateral agreement or a
S.A. = N.C. ) unilateral declaration by S.A. that it will apply N.C.
S.O. = N.C. )
Non-treaty law, except by bilateral agreement
S.A. = B/L )
S.O. = State of origin
S.A. = State addressed
N.C. = Contracting State to the new Convention
B/L = Contracting State to Brussels and/or Lugano

CHAPTER II -- DIRECT INTERNATIONAL JURISDICTION

59    The achievements of the Special Commission on direct international jurisdiction will be especially important, because of the many pressing practical demands, yet also highly confrontational in nature, since the interests of the claimant and those of the defendant are, in essence, diametrically opposed, and the primary role of the State is to offer the fairest balance achievable between these diverging interests. But it has to be admitted that there is considerable confusion nowadays in this area, except in the geographical sphere of the Brussels and Lugano Conventions. Thus we find more and more cases coming forward which are intended to "block" proceedings already in progress abroad, or expected to be instituted abroad (anti-suit injunctions or actions for declaratory injunctions, for example).⁷⁵ Actions like these are not, in our view, admissible in the relatively organised international framework which would take shape with the new Convention.⁷⁶

60    Before turning to the grounds of jurisdiction which may be provided in the future Convention, or be excluded from it (sections 2, 3 and 4), it is useful to recall some principles relating to the influence of public international law on the determination of the jurisdiction of States, and to touch on the question of the general or special character of the jurisdictional rules to be devised, especially in the light of the special problems posed by federal States, and the nature of the jurisdictional rules -- whether rigid or flexible -- or the restrictions which should accompany them (section 1). To end, we comment briefly on co-ordination in the matter of concurrent jurisdiction (section 5) and the impact of the structure of the future Convention, whether double or mixed (section 6).

section 1 -- general principles

§ 1 -- influence of public international law⁷⁷

61    When sovereign States meet in order to negotiate together an international treaty comprising private international law provisions, they effect a merger between the sources and the function of the rules of private international law. The Special Commission responsible for preparing the new Convention introducing provisions on international jurisdiction therefore finds itself in an "ideal" position. The States represented on this Special Commission must ascertain for themselves the extent of the margin of manoeuvre accorded to them by public international law. Within this margin of freedom, they must observe both self-restraint and reasonable conduct.

62    Public international law does not authorise a State, beyond the limits which it sets for them, to lay down a norm or to permit one of its institutions to define norms.⁷⁸ The crux of the problem is therefore how to sanction such breaches of public international law. As Pierre Mayer rightly points out, it may be possible to pin responsibility on a State but, in practice, the few diplomatic protests voiced have had hardly any impact.⁷⁹ The sanctions are to be found much more on a practical level, since other States may refuse to recognise jurisdiction exercised in this manner, either by authorising their own courts to find they have jurisdiction in the same case, or by refusing to give effect to a judgment delivered by the courts of a State which has declared itself competent outside the limits of public international law; or, perhaps, by combining both kinds of sanction, which in practice are often found together. This type of sanction is effective in an indirect sense, since it does harm to certain private operators while protecting others. Several judicial systems will therefore be acting concurrently, with the inevitable consequences of wasted time, inefficiency in the administration of justice, and extra cost at a time when all public budgets are severely restricted, when case dockets for most courts are overloaded, not to say saturated, and when national courts have ever greater difficulty in reaching their decisions within reasonable time limits.

63    For this reason, it is worth examining which are the principles or indeed the rules of public international law which can provide a better definition of State jurisdiction. The best starting point is of course the judgment of the Permanent Court of International Justice in the Lotuscase #N_80_:⁸⁰ "Far from laying down a general prohibition to the effect that States may not extend the application of their laws and the jurisdiction of their courts to persons, property and acts outside their territory, it leaves them in this respect a wide measure of discretion which is only limited in certain cases by prohibitive rules; as regards other cases, every State remains free to adopt the principles which it regards as best and most suitable". One must therefore ask whether the jurisdiction of States is not more accurately defined by public international law.⁸¹ One State can only use the power which it was conferred by rendering judgments within the limits of that power. When the State defines rules of direct international jurisdiction, it allows judges and litigants to know in advance the hypothesis in which the State has the intention to exercise the powers which it enjoys under public international law.

64    One immediate conclusion which presents itself is that a fundamental principle which ought to guide States in delimiting the direct jurisdiction of their courts is predictability. Because the jurisdictional rules are there to focus the attention of litigants on those instances in which courts may reach a finding on their substantive rights, the rules must be clear and precise, formulated so as to enable litigants to decide in advance, if possible with total certainty, which court will be able to render the expected judgment.

65    The basic rules derived from public international law can be summarised as follows:

a    Every State has sole competence to organise its own affairs;⁸² this means that it can create institutions for the purpose of stating the law as it understands it, define the circumstances in which these institutions may act, and determine the normative process, notably as concerns procedure.⁸³ However, this power is constrained by the fundamental right of citizens to enjoy equal and effective access to justice.⁸⁴

b    According to traditional theory, States have jurisdiction over people and property located on their territory (territorial jurisdiction); over their nationals, even those not present on their territory (personal jurisdiction); and in respect of their public services, although this type of jurisdiction is often controverted.⁸⁵ This threefold definition of types of jurisdiction is far from adequate to constitute the basis for the many grounds of jurisdiction which have been developed by private international law. Its essential shortcoming is that it was devised as a corollary to the principle of State sovereignty.⁸⁶ But the value of the triptych structure is the idea that there has to be some "substantial" or "significant" connection between the forum and the case.

Undoubtedly, some grounds of jurisdiction can be linked either to the territorial jurisdiction or to the personal jurisdiction recognised in public international law. Notably, the jurisdiction granted to the courts of the defendant's domicile, and the forum arresti, come under the heading of territorial jurisdiction. However, the forum patrimonii is not related to either of the types of jurisdiction mentioned in b) above, and therefore seems to be excluded. It is doubtful whether the jurisdiction of the courts of the place where a tort or quasi-tort was committed, or the capacity of the parties to elect a forum, can be classified as grounds of jurisdiction under public international law. For these, it is probably best to look for other principles of public international law.

c    Modern theory, inspired by the key texts on civil and political rights, says that States have jurisdiction of a kind which can be described as "proximity", whereby every State must be able to entertain a court action having a significant link with its territory, either through the circumstances of the case, or because of the connections of the parties to the case. This rule, called the "significant connection" rule, could be regarded merely as a modern version of the traditional rule explained above. While losing somewhat in precision, it represents a gain in flexibility and in the capacity to adapt to the increasingly complex and interlinked facts of international life and relationships.

66    The consequences of the foregoing, as far as the work of the Special Commission is concerned, may be summarised as follows: 1) predictability for litigants should, wherever possible, be given priority; 2)it must be ascertained that every jurisdictional rule admitted does in fact disclose a significant connection between the forum, the circumstances of the case and the parties to the dispute; 3) all forms of jurisdiction not disclosing such a significant link must be excluded; 4) in case of doubt, provision should be made for an exceptional clause which is sufficiently well defined to safeguard the requirement of predictability.

§ 2 - rigid or flexible jurisdictional rules? (forum non conveniens)⁸⁷

67    In comparative law, there are two major contrasting systems: that of civil law countries which prefer rigid rules of jurisdiction; and the system of common law countries, which prefers flexible rules of jurisdiction.

68    In the countries which prefer rigid rules, once the court has ascertained that it has jurisdiction under the applicable rules of jurisdiction, it has neither the right nor the power to refuse to exercise its jurisdiction, for whatever reason. The advantage of this system is, of course, the high degree of certainty offered to the litigants, and its virtually total predictability. Its disadvantage is well known: the rules of jurisdiction are framed in an abstract sense, in the hope that they will fit the largest number possible of actual cases, but without any potential adaptation a posteriori to the concrete case of which the judge is seised which may exceptionally be rendered necessary by the too abstract nature of the rule. The systems based on this tradition have created a rule of substitution, in order to offset the most flagrant types of injustice which would result from a negative conflict of jurisdictions. To avoid a possible miscarriage of justice, the court must rule that it has jurisdiction if no other court is competent or cannot be effectively seised of the case⁸⁸ and if there is no other criterion to found its jurisdiction in the case concerned. This rule is accepted as an indirect jurisdiction in the Interamerican Convention on Jurisdiction.⁸⁹

69    As regards the countries in the common law tradition, they show considerable flexibility in practice in applying the rules of international jurisdiction, thanks to the mechanism of forum non conveniens. In this regard, we refer the reader to the four documents drafted, respectively, by Australia, Canada, the United States and the United Kingdom for circulation to the experts of the Special Commission which met at The Hague in June 1996.⁹⁰ The reader may also wish to consult the Report prepared by Professor J.J. Fawcett, entitled Declining Jurisdiction in Private International Law.⁹¹

70    The issue which now concerns us is whether a theory similar to that of forum non convenienshas a rightful place in a Convention on jurisdiction and the enforcement of judgments, and whether it would be desirable.⁹² If the reply is in the affirmative, one must then ask what specific elements the future Convention should include in order to provide guidance for a court confronted with an issue of forum non conveniens.

71    This topic was touched upon during the proceedings of the Special Commission of June 1994⁹³ and that of June 1996.⁹⁴ As we know, in the context of the Brussels and Lugano Conventions, the question was raised whether room should be made for the theory of forum non conveniens. The Convention itself is silent on the subject. So is the Jenard Report,⁹⁵ for the simple reason that, initially, the six States which negotiated the 1968 Convention among themselves did not have the theory of forum non conveniens in their law. The Schlosser Report⁹⁶ on the Convention of 9 October 1978 concerning the accession of the Kingdom of Denmark, Ireland and the United Kingdom deals with this question,⁹⁷ in light of the fact that Ireland and the United Kingdom had initially asked for the text of the Convention to be adapted to include the theory of forum non conveniens. Professor Schlosser explains that Contracting States to the Brussels Convention are not only empowered, but actually bound, to exercise the jurisdiction conferred on them by the Convention; that the plaintiff must be certain that the court has jurisdiction; that time and money must not be squandered in considering and appraising the competence of the court; that the applicability of a foreign law may not be taken into consideration for the purposes of the Convention; that the choice which is deliberately given to the plaintiff by the rules of the Convention must not be suborned by applying a theory of forum non conveniens; the fundamental rules warranting the application of the doctrine of forum non conveniens are largely overridden by the Convention's own rules (such as the outlawing of exorbitant fora, the unified concept of domicile⁹⁸ Professor Schlosser therefore concludes that in the light of these arguments, Ireland and the United Kingdom gave up the idea of adapting the text of the Convention on this point.⁹⁹

72    Although Professor Schlosser, as Rapporteur for the Convention on the accession of the Kingdom of Denmark, Ireland and the United Kingdom to the Brussels Convention, seemed somewhat hostile to the theory of forum non conveniens for the purposes of the Convention, as writer and academician he takes a more tolerant approach.¹⁰⁰

73    We think all the reasons he gives in his report, representing the attitude of the civil law countries, are still current. However, the proceedings of the two Special Commissions of June 1994 and June 1996 have shown that although it may be unacceptable in the context of a double Convention to adopt a general principle of forum non conveniens, it might be feasible to apply it by way of exception and in certain specific cases.¹⁰¹ In the light of the discussions within the Special Commission, it seems possible to achieve a consensus, by restricting the application of a mechanism similar to forum non conveniens to the instances of concurrent jurisdiction contemplated in the Convention, while excluding it from proceedings brought before a court with sole jurisdiction.¹⁰² However, there was a lengthy and inconclusive discussion of the question whether a mechanism such as the forum non conveniens could be admissible when the court addressed is that of the defendant's domicile.¹⁰³

74    Introducing a mechanism similar to that of the forum non conveniens would require the experts to resolve the following questions:

-- the factors to be taken into account by the court seised when refusing to exercise its jurisdiction;
-- the factors which the court seised may not rely upon in refusing to exercise its jurisdiction (for example, the nationality of one or other of the parties, or the law applicable to the merits);
-- the question whether the court seised must act alone, or must consult and act in co-operation with the other court or courts which may be competent to deal with the case in issue;
-- the mechanism for transferring the case to the court regarded as being the "most appropriate to decide the case";
-- the residual jurisdiction which the court initially seised may reserve to itself after deciding to transfer the case;
-- the impact of the transfer on statute of limitation;
-- the consequences of such a transfer for the effects to be given to the judgment in the other Member States of the Convention, and especially as regards the control of the jurisdiction of the court of origin by the court addressed.

75    At all events, even if the new Convention were to adopt a forum non conveniens clause, this should not operate in favour of a court situated on the territory of a non-Contracting State. If it did, one of the key purposes of the new Convention would be defeated.¹⁰⁴

§ 3 - general and specific rules? the special status of states without a unified system¹⁰⁵

76    The real issue in private international law is deciding which national judicial system has jurisdiction to resolve an international dispute (general jurisdiction). However, the question of which court, within the appointed judicial order, specifically has jurisdiction (venue) is normally a matter for the internal law of the State whose judicial system has been appointed by the rule on general jurisdiction. This is standard practice with regard to subject matter jurisdiction. The latter, from the international point of view, does not require the parties to ponder any complex issues. But there may be considerable difficulty where the jurisdiction concerned is territorial. Two different courts, only kilometres apart, may reach fundamentally different decisions on their case.

77    This is even more complicated for States without a unified system of law. For these States, subject matter jurisdiction is bedeviled by another issue, the jurisdictional system of the court which has to deal with the case, whether a federal court or a national or regional court. Unlike the traditional rules for attributing jurisdiction, the procedures followed by one or other of these categories of courts may differ fundamentally, and may result in dramatically different outcomes to the dispute. It is probably impossible to settle issues like this through the Convention's provisions. However, they should be kept in mind when endeavouring to solve the other issues, especially with respect to territorial jurisdiction, in order to avoid exacerbating the uncertainty for the parties.

78    As regards territorial jurisdiction, we think it is extremely important, indeed of the very essence of the Convention, that the parties should be enabled to know in advance, with virtually total certainty (unless where exceptional clauses are included, or in the case of a mixed Convention) which court has territorial jurisdiction to hear their case. In this light, we think the Convention should adhere in the matter of territorial jurisdiction strictly to rules of specific, rather than general, jurisdiction.¹⁰⁶ This means that for all the States Parties, once the court has been appointed under a rule of the Convention, no "transfer" would be possible within that State by virtue of any internal, inter-State or interregional rules which may apply.

§ 4 - limits to the scope of jurisdiction?

79    Normally, once a court is appointed to exercise jurisdiction under the rules of the Convention, that court must be able to adjudicate the whole of the case between the parties, whatever the nature of the claims.

80    However, in some instances jurisdiction may be limited to certain defined causes of action. For example, in defamation cases, if the victim sues before the courts of his/her habitual residence, his action may be limited to the damage which he/she claims to have suffered on that territory, excluding any other kind of damage. On the other hand, if he/she decides to proceed at the place of the causal fact or at the place where the defendant has his/her habitual residence, the action may be expanded to cover all the damage suffered on any territory.

81    One should therefore enquire, for each ground of jurisdiction, whether it allows the whole of the case which has arisen between the parties to be adjudicated, or only certain well-defined kinds of action. This applies to the rules on defamation, unfair competition, and provisional or interim measures, to cite only a few examples.

section 2 - various admissible grounds of jurisdiction¹⁰⁷

82    We will explain the grounds of jurisdiction according to the weight of the imperative character which they may be given, in declining order. However, some kinds of jurisdiction may variously be assigned to one or other of the following headings: exclusive jurisdiction, protective jurisdiction, elective jurisdiction, and others.

§ 1 - exclusive jurisdiction¹⁰⁸

83    Most legal systems embrace the concept of exclusive jurisdiction. Such forms of jurisdiction are called "exclusive" because they automatically invalidate any contractual or tacit choice of jurisdiction; they do not allow for any lis pendens, since they cannot admit any "competition" with other jurisdictions,¹⁰⁹ and they prevent any joinder through related causes of action. If the new Convention is to include this concept of "exclusive jurisdiction",¹¹⁰ the courts of States Parties to the Convention will have to comply faithfully with these rules, declaring themselves proprio motu without jurisdiction if seised in breach of these rules. The rules are warranted by the fact that, in the light of the particular features of the case in issue, the court appointed under the chosen ground of jurisdiction is the only one able to adjudicate the case effectively, this being a pledge that justice will be properly dispensed. However, the Convention will then have to spell out what is to happen if the exclusive jurisdiction relevant in the case in question is situated on the territory of a non-Contracting State. In that case, in the framework of a worldwide Convention, and in view of the claimant's interest in obtaining a judgment which will be readily enforceable, the Convention could provide for a subsidiary rule of jurisdiction which would enable the case to be kept within the sphere of application of the Convention, or at least would do so as often as possible, since it is not entirely certain that the subsidiary criterion will confer jurisdiction on a court in a Contracting State. The disadvantage of this formula is that the judgment delivered by the court with jurisdiction under this subsidiary criterion will probably not be recognised by the forum of exclusive jurisdiction.

A) Jurisdiction with respect to immovable property

84    It may be thought necessary to provide that the court where the immovable property is situated has jurisdiction to entertain disputes relating to real property rights.¹¹¹ Such jurisdiction could be confined to disputes concerning the possession or ownership of the property.¹¹² It is less obvious whether jurisdiction in matters of real estate should also apply to disputes arising from leases on real estate.¹¹³ There are different kinds of leases: residential, occupational or mixed leases, commercial or office leases, leases on rural property. This kind of jurisdiction may offer an advantage where the dispute is connected with the manner in which the lease is being performed in the property in question, or where it concerns repairs or damage caused by the tenant, or the eviction of the tenant. All such disputes call for site reports, and these can best be made at the place where the property is situated. However this advantage, in the context of the Hague Conventions, loses much of its attraction since it is probable that the States Parties to the future Convention will also be Parties to the Hague Convention of 18 March 1970 on the Taking of Evidence Abroad in Civil or Commercial Matters.¹¹⁴ Moreover, notorious difficulties have arisen with this form of jurisdiction where the lessor and the lessee are both situated on the territory of the same State, which is a different one than that in which the property is situated. As we know also, some writers prefer the court of the place where the property is situated not to have jurisdiction for issues concerning the amount and payment of the rent. All these difficulties may prompt experts to refrain from providing for exclusive jurisdiction in the case of leases on real estate. If that is the decision, it will be necessary to monitor closely how the court addressed applies any rules of public policy on real estate leases which are applicable at the place where the property is situated. The competent court should ensure that its decision complies with the public policy because if, as is very likely, the judgment is to be executed at the place where the property is situated (especially if it is not executed voluntarily by the losing party), this judgment would remain a dead letter if it were to defy the public policy of the State where the property is situated.

85    Finally, if the Convention provides for exclusive jurisdiction in matters of real estate, it will have to specify whether it covers also contractual or personal actions or trust cases where these are connected with, or instituted at the same time as an action concerning real estate.

86    If the experts were to decide that jurisdiction in real estate matters in not exclusive, it should appear at least as an optional special jurisdiction. In such a case, we could imagine to empower the judge of the defendant's habitual residence to decline jurisdiction and direct the parties to the court of the place where the real estate is situated.¹¹⁵

B) Jurisdiction with respect to companies (corporations)

87    The topic of civil or commercial companies or other entities possessing legal personality of a more or less extensive kind is complicated by the hybrid nature of companies which derive at one and the same time from contract and from an institution. Depending on whether States are more or less liberal in their attitude towards companies, their legal systems will emphasise the contractual aspect (for the more liberal among them) or the institutional aspect (for the less liberal ones). Every country has some form of public register, sometimes kept by public service staff or by private individuals to whom this public service is entrusted. It may therefore be thought that all disputes concerning the existence of companies, their validity or their registration, should be brought before the courts of the place where the company is listed or registered, i.e., the place where the relevant register is kept.¹¹⁶ Unfortunately, we know that this is sometimes an artificial place, because companies can easily detach their statutory headquarters or place of registration from their actual headquarters or the place where their activities are mainly carried on. If the experts decide to make provision for exclusive competence in this field, they must spell out the kinds of case in which this form of jurisdiction will come into play, leaving all other cases to the jurisdiction of courts provided by other rules.¹¹⁷ For instance, it may be felt that the courts of the place of registration or the statutory headquarters should not deal with disputes associated with the decisions of company bodies, or with the liability of company directors, since it is probably better to adjudicate such matters at the place where the company carries on most of its business or has its main centre of interests.

88    It should also be made clear what is meant by the term "corporation". Is this notion to be extended to cover groups of any kind, including non-profit associations? A priori, nothing prevents such an extension but for the instances where these groupings are not registered.

C) Jurisdiction with respect to public registers

89    As decided by the Special Commission in June 1994,¹¹⁸ it may be felt necessary to have exclusive jurisdiction for courts dealing with disputes relating to the validity and effects of entries in public registers. This form of jurisdiction would be given to the courts of the place where the register with the contested entry is situated. The registers concerned are land or mortgage registers, registers of patents and copyright and generally speaking, any kind of public registration.

D) Jurisdiction with respect to intellectual property

90    The term "intellectual property" covers all intangible rights derived from patents, trademarks, designs and models, and copyright or other equivalent rights. These rights may engender contentious cases of various kinds. One initial category concerns the validity of the rights which have to be registered. As we have said above, a dispute of this nature must normally be submitted to the courts of the place where registration was carried out.¹¹⁹ A second category has to do with infringements of intellectual property rights by imitation.

These are generally actions in tort; they do not require special provisions of their own. A third category may occur when the rights have been assigned or licensed. These are actions in contract which must comply with the general or specific rules for actions in contracts.

E) Jurisdiction with respect to the enforcement of judgments

91    Since the enforcement of judgments, when it is not voluntary on the part of the losing party, calls for specific measures which sometimes involve the forces of law and order, exclusive jurisdiction could be given to the courts of the place at which the measures will actually be carried out, i.e., where the judgment will actually be executed.¹²⁰

§ 2 - protective jurisdiction

92    These forms of jurisdiction are called "protective" because they take account of the weaker position of one of the parties to the proceedings, on the basis that the weaker party deserves to be treated differently from the other parties, and to enjoy the benefit of special kinds of jurisdiction. Essentially, there are three groups of people to be protected: workers, holders of insurance policies, and consumers.¹²¹ Before we turn to the possible jurisdictional rules for each of these categories of plaintiff, we should emphasise that only individual actions brought by these persons on their own behalf¹²² should come within the reach of these forms of jurisdiction. A special place must be accorded to collective or joint actions¹²³ which raise different issues and must, in our view, be tackled by other means.

A) Workers

93    Workers' individual actions could be brought to the court of the place where the work is performed, this being the court closest to the worker, provided the worker does his or her work in one place only.¹²⁴ If the worker does not work in one place only, jurisdiction could be given to the court of his habitual residence at the time the action is brought.¹²⁵ Choosing the habitual residence of the worker at the time the case is brought, rather than his or her residence at the time the contract of employment is concluded, has the advantage of being more faithful to the aim of protecting the worker. If the worker performs his or her work in several places, some of which are not situated on the territory of a State Party to the Convention, but the worker has his or her habitual residence on the territory of a State Party to the Convention, it would be appropriate for the court to have jurisdiction for the whole of the case, not only for those parts of it which relate to work done on the territory of the Contracting States.¹²⁶

94    However, it could be possible not to provide for a different criterion depending on whether or not the worker performs his or her work in a same place. Indeed, if the criterion chosen is that of the worker's "actual centre of professional activities", it would cover all hypotheticals. It is not certain, then, that it would be useful to provide another optional jurisdiction in favour of the court of the place where is situated the undertaking having hired the worker.

95    Should we authorise choice of court clauses in employment contracts? Some of the scholarly writings on the topic have shown that for senior executives, expatriation contracts of employment were genuine negotiated contracts, and that a clause for choice of jurisdiction in these contracts does not carry the disadvantages which it may have for other categories of workers. However, the Convention would probably become too complex if, within a single category of persons, further distinctions had to be made. One could perhaps include a provision to validate clauses on choice of court in contracts of employment, while accompanying this provision with a forum non conveniens analysis in favour of the worker. A court seised under this choice of court clause would decline jurisdiction if it was clear, when the proceedings began, that the court would have significant disadvantages for the worker.¹²⁷

96    As for collective actions, especially those which bring together workers who may be located on the territory of several contracting or non-Contracting States but who have the same employer, these cases should be brought to the courts of the place where the defendant is situated. In fact, as soon as highly vulnerable people for whom the effort has been made to create protective rules come together, and are enabled to take joint action, they lose much of their vulnerability; the respective weight of the parties is once more virtually equal, and there is no reason not to require the defendant to be sued before his own courts. The question then arises of what will happen if such a court decides in law that the group action is inadmissible, a conclusion which it might reach for a number of different reasons.¹²⁸ However, it could be spelt out in the Convention that a court seised of a group action of this kind is not to declare it inadmissible for the sole reason that it is not covered by the local procedural law. A priori it seems difficult to go further than this.

B) Holders of insurance policies and/or insured persons

97    It may be thought that this category should cover, not only the holder of the insurance policy, but also the beneficiary of the insurance contract, who may not necessarily be the same person. However, we believe it is necessary to exclude those who hold insurance for professional reasons or in the context of professional activities, who do not necessarily need special protection. Apart from professional insurance, it does not seem desirable to exclude any other type of insurance (civil liability insurance, home insurance, personal accident insurance, life insurance, etc.).

98    In such cases, the best rule of protection seems to be the court of the claimant's habitual residence at the time the action is brought.

99    Should provision be made for authorising choice of court in this case? We would incline towards the negative view, except where the choice is made after the dispute became moot. But in this case, we still have doubts, as experience shows that even when the dispute has taken shape, the holder or beneficiary of the insurance does not always understand the implications of the specific issues of procedure and jurisdiction involved, and may give his consent, even after a dispute has begun, without really grasping the significance of such consent. We could complement the admission of choice of court in this matter with the same rule proposed above for workers. That rule allows the judge to decline jurisdiction if the choice of court reveals to be too "unjust" for the holder of policy.

C) Consumers

100    The term "consumer" should be understood as meaning a person who acts for family or personal purposes, by contrast with any person or entity acting for professional purposes. Moreover, jurisdiction introduced to protect the consumer must be individual to him, and not be used for anyone acting on behalf of the consumer or in his stead.

101    It will probably be necessary to decide what kind of contracts or legal operations are covered by the jurisdictional rule chosen. It may be felt that any dispute arising from a contract for goods or services entered into by the consumer must be submitted to the court appointed under the treaty clause. It may be asked whether the contract must necessarily be one between the consumer and a professional, or if it is also admissible for jurisdiction to cover contracts between consumers themselves (for instance, the sale by an individual of a second-hand car to another individual¹²⁹ As for the jurisdictional rule itself, it seems preferable to confer jurisdiction on the court of the consumer's habitual residence,¹³⁰ whether the consumer is the plaintiff or the defendant. Moreover, reference ought to be made to the habitual residence at the time proceedings are started, not the one which exists on the date when the contract is concluded, for the same reasons as already given for workers, although the degree of predictability for the co-contractor of the consumer is less than for the employer; possibly, therefore, a distinction is needed between the two categories of cases.

102    As regards group actions, protection for the consumer is guaranteed by the fact that his rights will be protected by the group action itself, and he will not as an individual have to endure the complications, cost and difficulty of pursuing an action on his own. To this extent, we feel that the reasons for having a particular rule of jurisdiction when the consumer has to face his co-contractor alone disappears when his rights are protected by a group action. This is why we think it would be preferable to revert in such cases to the classic rule of forum actor sequitur,giving jurisdiction to the courts of the defendant's habitual residence. Of course, the court must not be allowed to dismiss the group action solely because it is unfamiliar to the local law.¹³¹ The Convention must be clear on this point. But the abolishing of any alternative forum may be difficult to accept since most of existing associations are territorially limited for their activities. However, we already see associations whose goals are multinational and which may represent consumers residing in several countries. If we were to maintain an alternative forum at the consumer's residence, then the association could institute action in many fora. It would be necessary, in such a case, to limit the scope of the action which it would be authorised to undertake before any of those fora.

§ 3 - choice of court¹³²

103    Although it is possible to take a restrictive attitude towards the validity of a choice of court by the parties when the dispute falls into an area covered by exclusive or "protective" jurisdiction, in all other cases it is probably best to take a liberal approach to the validity of such clauses. There are four key issues to be dealt with: the validity of the contractual clause concluded before any dispute arose; tacit choice of court; the agreement on jurisdiction in areas other than contracts and the impact of the doctrine of forum non conveniens or lis pendens on the choice of forum.¹³³

104    But before turning to these questions, some explanation is required of the circumstances in which the Convention's provisions on choice of court may be applied. It seems preferable for such a provision to apply regardless of the parties to the dispute, and even if they are not domiciled in one of the Member States of the Convention, provided that the chosen court or the court seised is situated on the territory of a State Party to the Convention. This proposal is prompted chiefly by the need for unification, which practitioners need when they apply to a court for a ruling on the validity of a clause on choice of court. However, one must not disregard the consequences of such a choice. Unless otherwise specified in the Convention, it is possible that such a rule might apply to purely internal contracts. Perhaps this is not the intended result. In that case, it should be made clear that the rule enshrined in the Convention on the validity of choice of court will apply only where the contract is an international one. This notion will be decided by the court, when adjudicating the case, in the light of the circumstances prevailing at the time when the contract came into force, whatever changes may have occurred between the date of conclusion of the contract and the date of the dispute such as a transfer, which has altered the foreign element in the contract.

A) Validity of the contractual clause on the choice of court

105    This type of clause has become very prevalent in international contracts, to a point where there no longer seems any need to question its validity in principle. It seems natural for the Convention to include a provision on the formal validity of such clauses, and to specify in which circumstances they will apply.¹³⁴ As for the lawfulness of the clause, since the Convention forms a single whole all its clauses will be lawful, and the text need not state this explicitly. There remains the question of substantive validity, as distinct from formal validity, and it may be asked whether it is necessary to provide for this separately.

a) Formal validity

106    Developments in domestic law concerning the formal validity of clauses on choice of court indicate that the main emphasis is now on the availability of proof that each party gave free and informed consent to the jurisdictional choice. The burden of proving consent must lie on the party seeking to rely on the clause vis-a-vis his co-contractor. The conditions of formal validity specified in the Convention must do no more than assist the process of furnishing proof. It may however be thought that the clause in the Convention could be non-exhaustive, since technological advances and progress in the conclusion of international contracts may result in the Convention provisions becoming obsolete or out-of-date, unless care is taken to state that they are merely examples of what may be acceptable as proof of consent. Consent must be treated as sufficiently proven if the clause is part of a written document signed by the parties; if it has been referred to in correspondence exchanged between the parties confirming the contractual agreement, without protest by the party against whom it is to be used; if it features in the general contractual terms of one of the parties, provided these general terms have been addressed, before the contract was concluded, to the party against whom the clause is to be invoked; and if the parties to the contract have formed the habit of always including the same jurisdictional clause. Such a habit will be held to exist as between the parties if at least some contractual relations have taken place prior to those which are disputed. If proof is made that the extended jurisdiction clause is in regular and familiar use in the branch of activity and the type of contract in question, this clause likewise must be admitted. This will be the case where, in a particular branch of activity, it is customary to confer jurisdiction on courts (for instance, maritime courts) with special competence in that field. This usage will therefore be fairly limited in scope. On the other hand, if usage relates to the form of the contract (a contract concluded rapidly between absent parties, bearing solely on the essential clauses), reference to another document for all other contractual clauses will only serve to prove consent if this other document is of international significance (for example, the contractual terms set by international organisations or non-governmental organisations, the International Federation of Consulting Engineers (FIDIC), etc.). Finally, if consent can be proved by any other means allowed under the law of the court seised, it should be possible to accept the choice.

b) Substantive validity and lawfulness

107    Turning to the role of national law in issues of substantive validity and lawfulness, we feel it is more consistent to say that the future Convention forms a single whole, and that States Parties cannot use their national laws, even for these two issues. Indeed, as regards substantive validity, the fact that specific clauses in the Convention forbid the inclusion of such clauses in a number of specific instances shows that the conditions of substantive validity have been settled by the Convention, and the various national legal systems have nothing further to say on the question. The same conclusion suggests itself with regard to lawfulness. In fact, bearing in mind the substantive scope of the Convention, it may be felt that the questions concerning the lawfulness of the clause to be admitted in the various fields covered by the Convention have been settled. The only remaining area of uncertainty is whether the clause is admissible in company statutes of commercial companies or other groups. Perhaps a commentary in the Explanatory Report will suffice to resolve this question.

B) Tacit choice of court

108    Whether or not tacit choice of court may be permitted is a key issue in the legal regime for international jurisdiction. Depending on whether it is allowed, the defendant will be required to submit his intended objection of lack of jurisdiction either in limine litis, or at any time during the proceedings. Many national systems have a requirement that any objection of want of jurisdiction must be raised before any defence is argued on the merits. Otherwise, the defendant will be regarded as having accepted jurisdiction, and cannot afterwards contest it, either in the proceedings before the court of origin or even before the court which is addressed in order to give effect to the judgment in another country. For the defendant, therefore, the rule of tacit choice is a draconian one. It raises numerous difficulties for the right of defence, even if the defendant is present in person in the court seised. A defendant who is a natural person may well be unaware that there is an option of challenging jurisdiction, and if no challenge is raised before a defence on the merits is begun, he will lose this right. When the defendant is not present but is represented by a lawyer, as is now the case in most international proceedings, especially commercial cases, issues of representation will arise. The Special Commission, in June 1994, went so far as to conclude that "in the case of a convention intended to be worldwide, concern should be given to verifying that the appearance is indeed voluntary and not dictated by circumstances or by an abuse of economic power or other unfair means".¹³⁵

109    Hence the problem has more to do with defining the concept of "appearance" than with admitting the actual rule.¹³⁶ Several solutions may be envisaged:

1)    When the defendant is represented, a representation clause in the Convention could require an express ad litem authorisation. A provision such as this would probably be difficult to implement, and would conflict with a number of legal systems in which advocates who are duly registered with the local bar association do not need to appear before the court with an express ad litem mandate. Furthermore, the Convention should not have to go into such detail, overburdening the text to no real purpose.

2)    Whether the defendant is represented or appears in person, the court could be placed under an obligation to ascertain proprio motu that the appearance is valid, and also that it is free and informed. However, the court could also be left free of any such obligation, with the option of checking if the circumstances warrant it. The Explanatory Report would then include examples of such circumstances, such as, for instance, the defendant being a natural person, the nature of the dispute and the amount of money involved.

110    At all events, we think it would be regrettable if the Convention made no provision for tacit choice, as this would mean that the court seised would always have to ascertain for itself that it has jurisdiction, thus overloading the proceedings, and perhaps to no purpose. In any case, even if a rule of tacit choice is decided upon, it cannot apply to forms of exclusive or protective jurisdiction. The Convention must make this clear. In these various instances and categories of jurisdiction, the court must necessarily ascertain for itself that it does in fact have jurisdiction. If this is not done, we would take the risk to nullify the advantages of exclusivity or protection sought.

C) Choice of court in matters not pertaining to contracts

111    Is it possible to allow a choice of court when the case is not one of contract? We believe that in all cases except those which call for exclusive or protective jurisdiction, there is no reason not to allow the parties to make a choice of court a posteriori, i.e., when the dispute has already arisen. In that case, one must insist that the court chosen by the parties has a connection with the circumstances of the case, so as to avoid some courts becoming centres of litigation for reasons which are not always clear. It must be admitted that the concept of a "neutral court" may be of value in international trade, especially when the parties do not want to entrust their case to any of their own courts, and are also reluctant to go to arbitration. However, we also know that when legal funds are tight some courts are unwilling to deal with cases unconnected with their own territory, even if such cases help to generate local economic activity (the use of local barristers, experts, hotels and restaurants, etc.).

D) Choice of court clauses and forum non conveniens or lis pendens

112    This question was tackled for the first time by the Special Commission in June 1996.¹³⁷ It was generally agreed that the autonomy of the choice made is primordial, and that it must be respected and protected from any interference by the courts; their only task should be to decide on the validity of the choice of court, in the light of the Convention criteria. Although the principle itself seems beyond question, it has nonetheless been rightly suggested that for the sake of proper international administration of justice, in some cases valid choice of court clauses could be declared ineffective. One such case would be, for instance, when proceedings are taken out by a third party (the end user of the product) against one of the parties to the contract; the latter could then start interlocutory warranty proceedings against his co-contractor, in spite of being already committed to him by a choice of court clause, while the co-contractor would be unable to set up the clause against him. This is because it may be useful, both for the third party who is not a party to the clause, and for the sake of saving resources in the legal systems which may be involved in the proceedings, to have all the issues adjudicated at the same time, in the same proceedings and by the same court.

113    The Special Commission also suggested that the future Convention should deal with the question of interference by lis pendens with a choice of forum. This raises the more general question of whether the court chosen by the parties in their choice of forum clause has exclusive jurisdiction or not. If it has, there will be no lis pendens. If it does not, lis pendens may be admitted, and should be regulated in the same manner as elsewhere.

114    It should also be considered how far the choice of a forum by the parties excludes any recourse to another forum to obtain interim or provisional judgments. Article 6.4 of the Hague Convention of 25 November 1965 on the choice of court offers guidance on this question.¹³⁸

§ 4 - other jurisdiction

115    In this part of the report we will consider what kinds of jurisdiction the Convention may provide, either as rules of principle, available to both plaintiff and defendant, or as an option for the plaintiff. First, however, it must be asked whether it is desirable to give the plaintiff a free choice of court, and what balance should be struck between the interests of the plaintiff and those of the defendant. A) The balance between plaintiff and defendant

116    When considering the respective rights of the plaintiff and the defendant, inevitably we have to ask whether either of them has a need for protection. A priori, as soon as we have admitted protective jurisdiction of the kinds proposed above,¹³⁹ we may ask whether it is necessary to pursue the task of protection by offering the plaintiff a choice between the traditional jurisdiction, at the domicile of the defendant, and optional kinds of jurisdiction such as those in the Brussels and Lugano Conventions, especially Article 5. We think the reply to the question should depend on whether the Convention is to include a theory similar to forum non conveniens.¹⁴⁰ In fact, the jurisdiction of the plaintiff's habitual residence, which in theory may seem to respect completely the interests of all concerned and the balance among them, may sometimes in practice prove inequitable. We then have two alternatives. Either we decide to create optional forms of jurisdiction for the plaintiff - which would risk tipping the balance rather too far on his side,¹⁴¹ so that a theory similar to forum non conveniens would have to be introduced to mitigate this drawback in appropriate cases - or the plaintiff could be denied any optional jurisdiction, the traditional jurisdiction at the habitual residence of the defendant being retained, with perhaps a larger number of special rules.

117    If experts opt for the former alternative, they must be especially vigilant when framing the provisions for adoption. Experience has shown that rules such as Article 5.1 or 5.3 of the Brussels and Lugano Conventions are difficult to use, and often result in unsatisfactory outcomes.¹⁴²

B) Jurisdiction in contract

118    If it is decided to include a special jurisdiction rule for contracts,¹⁴³ we should not take inspiration from the text of Article 5.1 of the Brussels Convention.¹⁴⁴ It seems reasonable to propose that the court appointed should have jurisdiction to resolve all disputes arising from a contract, including issues of validity and interpretation, bearing in mind that one of the objectives of the future Convention should be to concentrate litigation in the place of a single appropriate forum, rather than letting it be split up according to particular contractual obligations.

119    What court should be given jurisdiction under the Convention? A priori, the court of the place where the contract is performed seems the most appropriate, since it is at the place of performance that the contract has its centre of gravity, its place in the legal and economic order of the country. It will also, most probably, be the locus of interaction of the various parties to the contract, since at least one of them is likely to be present on the territory where the contract is performed. Choosing the place of performance has numerous advantages, but it also presents certain drawbacks. For instance, in a complex contract, there will be several places of performance, according to the various contractual obligations. One possibility would then be to say that the place of performance, as referred to in the Convention, is the place of the "characteristic obligation" of the contract. However, this concept of a characteristic obligation is often arbitrary, and does not necessarily represent the economic reality of the contract. Moreover, some legal systems, especially common law ones, do not have the notion of a "characteristic performance", and admittedly, this is often more of a legal fiction than a concrete reality. If this is the direction taken, the Convention will also have to decide whether the choice by the parties of a place of performance of a specific obligation, or of the contract as a whole, can influence the rule of jurisdiction even though the clause whereby the choice has been made of a place of performance does not conform to the conditions of validity required for the choice of forum clause.¹⁴⁵

120    In view of these difficulties which may not be possible to overcome, the Special Commission could decide to adopt a minimalist provision which would apply only to certain types of contracts and would prefer an enforcement situs easily defined in practice: 1) the effective delivery locus of the thing or the property ; 2) the place of performance of the service. This provision could avoid the debate on the characteristic obligation or on the characterisation of the contract as a whole. When the contract at stake does not permit the use of the rule, jurisdiction would be defined by the subsidiary rule which is always available.¹⁴⁶

C) Jurisdiction in tort¹⁴⁷

121    It would not be sensible, in this regard, to take as a model Article 5.3 of the Brussels Convention: seemingly, it offers a simple and practical rule, but in reality, it cannot work properly in complex proceedings, as shown by the very first decision rendered by the European Court of Justice interpreting this provision. It makes too much room for concurrent jurisdiction, and cannot therefore be satisfactory; indeed until now, the Court has always declined to repeat this solution, while not rejecting it out of hand.¹⁴⁸

122    If it is decided to include a ground of jurisdiction for tort, it would probably be best to draft a detailed clause listing all the major categories of disputes known to occur in this field.¹⁴⁹ If the dispute involves only two parties, a victim and a perpetrator, it could be decided to give jurisdiction to the courts of the victim's domicile, provided this would have been foreseeable from the defendant's point of view. On the other hand, if the perpetrator would have been unable to foresee this jurisdiction (if he did not know the habitual residence of the victim, as will be the case if the victim travelled to the territory where the accident occurred), one may ask whether it would be better to opt for the jurisdiction of the place where the causal fact took place. A provision of this kind would make it possible to solve the tricky question of damage caused on one side of a border, whereas the causal fact took place on the other side. Indeed, in all cases of pollution the defendant, the author of the pollution, can be presumed to know that his polluting act could affect victims habitually residing beyond the border separating him from them. The same will apply to acts of defamation via the press, television or the Internet, and acts of unfair competition on several different markets. The real difficulty with rules of this kind is the actual definition and proof of the notion of predictability and knowledge.

D) Jurisdiction in matters concerning branches

123    A rule could be provided known as "gares principales", whereby the plaintiff can bring a parent company defendant before the courts of the place of establishment, of the branch or other centre of activity, as long as the dispute arose from the activities of that establishment, branch or centre.¹⁵⁰ It will probably be necessary to be vigilant in defining what is meant by a "branch, establishment or centre of activity", and to decide whether it is advisable to exclude all activities undertaken in the form of a separate legal person (subsidiary), on condition this separate legal person is not purely fictitious, i.e., a "front" intended to protect the real defendant, who is solvent, from being sued.¹⁵¹ Likewise, we should ask ourselves whether the mere presence of an agent in charge of the commercialisation of a foreign company's products would suffice to sue the latter before the court of the country where the agent is located.

E) Jurisdiction in matters of trusts

124    It is probably necessary to provide a special jurisdictional rule for trust cases, as the Working Group and the Special Commission in June 1994 admitted,¹⁵² without however reaching any conclusion on the content of the rule. In devising it, account will be taken of the Hague Convention of 1 July 1985 on the Law Applicable to Trusts and on their Recognition, which emphasises the voluntary nature of trusts. Apparently, all legal systems which recognise trusts allow a choice of court for disputes internal to the trust. Hence the new Convention should likewise include a choice of court clause. If no choice is made, jurisdiction should be given to the place of the "centre of gravity" of the trust.¹⁵³ In our view, it is possible to keep the four elements proposed in Article 7 of the Hague Convention on trusts, as a basis for determining the centre of gravity of the trust. It must also be decided which categories of trust are covered by the Convention. To ensure consistency with the 1985 Hague Convention, it would be preferable to confine the application of the rule to "trusts created voluntarily" in writing. However, this rule would have the disadvantage of excluding trusts created expressly under the law; although there are not many of these, they can engender disputes within the scope of the Convention.¹⁵⁴ Certain other questions will have to be clarified, such as the exclusive or non-exclusive character of the jurisdiction¹⁵⁵ and the possibility of exclusive jurisdiction coming into play for property matters where the dispute relates to an immovable constituted as a trust.

F) Related actions

125    The question of related actions must also be studied. It is probable that a jurisdictional rule based on these will be useful, indeed a necessity, in the Convention now under preparation. Related actions must be defined; the relationship may be based on identical facts and/or identical law in proceedings which have been or may be instituted. However, it may be asked whether jurisdiction based on related causes of action has to be autonomous, or whether it should be included as one of the factors to be taken into consideration by the court when examining the possibility of a forum non conveniens. We feel, however, that the characteristics of the theory of forum non conveniens are such that an independent rule may still be necessary, even if the Convention contains a rule on the forum non conveniens.¹⁵⁶

G) Provisional and protective measures

126    As for rules of jurisdiction concerning provisional and interim measures, we think these are essential, especially on the international plane, bearing in mind the complexity of cases and the increased facility for persons (especially legal persons) to distribute their assets, especially in countries which are difficult of access, either because of special legal rules or because of a banking system which continues to give priority to secrecy. In this regard, it will be useful to consider the ila Resolution adopted by the Sixty-seventh Conference held at Helsinki, on a proposal by the Committee on international civil and commercial procedure, concerning provisional and interim measures in private international litigation.¹⁵⁷ Some of these principles may be unfamiliar to legal systems in the Roman law tradition, but on the whole they strike a fair balance between the respective interests of the plaintiff and the defendant, and they offer a definition of provisional and interim measures which is very useful for the purposes of the Special Commission. The Explanatory Report could perhaps mention this resolution of the ILA for interpreting clauses to be included on provisional and interim measures.

H) Jurisdiction in matters regarding maintenance (support) obligations

127    If the experts decide that the future Convention is to deal with maintenance obligations,¹⁵⁸ the question will then arise of defining the maintenance creditor, and especially the notion of a spouse (should this be confined to married or formerly married couples, or should it be extended to other relationships?). It will also be necessary to enquire whether a creditor can include relatives in the direct or collateral line of descent.

128    As for the jurisdictional rule which could be adopted, it will necessitate an in-depth discussion of advantages and inconveniences resulting from the habitual residence of the maintenance creditor as the main forum as we have already mentioned above.¹⁵⁹

I) Jurisdiction in competition

129    If the Special Commission decides to include a special clause on actions in competition, it will have the choice of providing jurisdiction, not only in the traditional sense for the courts of the defendant's habitual residence,¹⁶⁰ but also for the courts of the place where the act of unfair competition occurred, of the place where the victim suffered damage, or of the place where the effects of the act of unfair competition have made themselves felt. A study of comparative law shows that, in varying degrees, the different legal systems allow for any of these to be used alternately. Most of the time, when jurisdiction is given to the courts of the place where the victim suffers damage, or of the place where the effects of the act of unfair competition are felt, this jurisdiction is limited to actions for damage suffered at this place, because of the strict territorial extent of the act of competition. If the victim wants the whole of the damage compensated, he will have to apply to as many courts as there are places where damage has occurred.

130    If we wish to attempt a jurisdictional criterion based on an economic analysis of competition law cases, the starting point has to be that competition can only exist where there is a market. But the market exists only if both parties to the action are present in it, either through an establishment, a branch or a subsidiary, or because their products or services are already being offered to customers there. If this premise is accepted, the most appropriate forum, both for compensating damage suffered by the victim and making restraining orders, is the court situated on the territory of the market where both parties are present (in the economic sense of the term), where the act of competition was carried out or where the local rules of competition law or unfair competition have been breached. This forum has many advantages: 1) it is predictable both for the plaintiff and for the defendant, who are economically active in the market concerned; 2) the plaintiff and the defendant must have anticipated the risks inherent in the law applicable to the place where the act of competition took place; 3) the forum situated close to the facts is the best placed to appraise the impact on the market and on the victim of the acts of which the defendant is accused, and can easily find evidence on which to base its decision; 4) this forum can also, since the defendant is present, order him to suspend the activity in question; 5) damages can be appraised in a global sense, as the economic calculation will be made on the basis of the local market, and extrapolated to the other markets according to the market share held by the plaintiff and the defendant, and the potential harm suffered by the plaintiff in the light of its market share.

131    Introducing this criterion does not completely dispose of the possibility that several markets may be affected at the same time, on which the plaintiff and the defendant are present in equal measure. In that case, the plaintiff could be allowed the choice of suing in any of the markets concerned. It would be for the chosen court to apply by distribution the laws of the various markets concerned, in ascertaining that the contested act is indeed a breach of competition rules in each of the markets concerned.

132    Finally, if the proposed criterion cannot be applied because the plaintiff is not yet present in the market, but had simply intended to sell a product on it in future (which would be the case with a counterfeit product not yet marketed), the victim could always sue at the place of the defendant's habitual residence (natural person) or at the place of the principal establishment or head office of the defendant (legal person).

J) Jurisdiction of the defendant's habitual residence

133    Some readers will probably be surprised that we accord such belated recognition to the jurisdiction of the courts of the defendant's habitual residence. There are several reasons for this: 1) This form of jurisdiction is unquestionable, and is in fact unquestioned even if common law systems do not have this jurisdiction as such but do not refuse it as an indirect jurisdiction because it is considered reasonable; 2) it is a "general" jurisdiction, in the sense that all actions, of whatever kind and without limit, can be brought before these courts; 3) in practice, this is a residual jurisdiction, as the plaintiff will always hesitate to take up the legal cudgels on the terrain of the defendant. The place to be assigned to it in the future Convention should not involve significant legal or practical consequences. In this sense, it is a didactic approach.

K) Other jurisdiction under domestic law

134    Depending on whether it is decided to make the new Convention a strict double Convention or a mixed Convention, this heading will be either irrelevant or necessary. If there is a strict double Convention, Contracting States will no longer be able to authorise their courts to exercise jurisdiction otherwise than as provided by the Convention. On the other hand, if it is to be a mixed Convention, it will be necessary to include a provision to govern the freedom of the courts. There will of course be an impact on judgments rendered under these forms of jurisdiction.

section 3 - exorbitant and excluded bases of jurisdiction¹⁶¹

135    For the Convention to be both attractive and useful to litigants, it must include a list of exorbitant forms of jurisdiction the use of which is prohibited under the Convention. Indeed, if we have a double Convention, this list is placed only for pedagogical reasons. It is then a narrative norm since all jurisdictional grounds not authorised by the Convention are automatically excluded. On the contrary, if we have a mixed Convention, the list of excluded jurisdictional grounds is essential and truly normative.

§ 1 - methodology

136    In compiling this list, some guidance can be found in the method adopted by the Brussels and Lugano Conventions. This method is a two-stage one: 1) each State represented at the Diplomatic Session which adopts the text of the Convention will declare which forms of exorbitant jurisdiction in its national rules it intends to discard for the purpose of the Convention. At an early stage during the negotiations preceding the Diplomatic Session, States will be invited to make known the list of forms of jurisdiction which they wish to have included in this Convention clause. This list will be particularly necessary for all States whose position on this question is not yet known, unlike the States Parties to the Brussels and Lugano Conventions, whose lists are already familiar. It seems evident that the more accurate and complete the list, the more attractive the Convention will be for litigants. However, by contrast with the Brussels and Lugano Conventions, the list will be drawn up in abstract terms, not expressly quoting national rules; 2) the list must not be regarded as an exhaustive and closed affair. Hence the text of the clause comprising the list must include the phrase "for instance", thus enabling all litigants, when facing what they regard as an exorbitant form of jurisdiction when the Convention falls to be implemented, to seek to have it recognised by the court as such. The question then arising is whether the Convention should include a general definition of what is to be understood as an exorbitant form of jurisdiction, in order to provide some guidance for a court facing such a request from a litigant.

137    Another method, which does not necessarily exclude the first, would consist of offering a general definition, supplemented by examples of exorbitant forms of jurisdiction. It would then be for each party to raise the issue of the exorbitant nature of the jurisdiction set up against him, on a case-by-case basis, and for the court in making its decision to draw upon the examples given in the Convention in order to determine whether a provision in its law actually matches what is set out in the Convention. This latter system has the advantage that it does not compel States to proceed by means of declarations, a procedure which might well deter some of them from acceding to the Convention. However, it has one major drawback, that the outcome of the issue is less certain for the litigant, and that international proceedings will absorb more time and effort.

§ 2 - definition of the concept of "exorbitant jurisdiction"

138    We venture to suggest here one possible definition of exorbitant jurisdiction: jurisdiction is exorbitant when the court seised does not possess a sufficient connection with the parties to the case, the circumstances of the case, the cause or subject of the action, or fails to take account of the principle of the proper administration of justice. An exorbitant form of jurisdiction is one which is solely intended to promote political interests, without taking into consideration the interests of the two parties to the dispute.

§ 3 - examples of exorbitant grounds of jurisdiction¹⁶²

139    By summarising the conclusions of the Working Group and the Special Commission of June 1994, we can compile a list of the following grounds of jurisdiction:¹⁶³

-- the mere presence of property belonging to the defendant to justify general jurisdiction, but no agreement has been reached as to which actions can be authorised by way of exception (e.g. Art. 4 a of the Additional Protocol to the 1971 Hague Convention);
-- the nationality of one of the parties;
-- the domicile/habitual residence of the plaintiff, except in the cases specified in the Convention;
-- "doing business" or "entreprendre des activités commerciales" as a general ground of jurisdiction (e.g. Art. 4 d of the Additional Protocol to the 1971 Hague Convention), although there has been no consensus on this point;
-- the issue of a writ, a summons or other document instituting proceedings during a temporary stay by the defendant (Art. 4 e of the Additional Protocol to the 1971 Hague Convention), although no agreement has been found on exceptions under this heading;¹⁶⁴
-- unilateral choice of the court by the plaintiff (for example, on an invoice), without any "express consent" by the defendant;

140    The following grounds of jurisdiction could be added to this list:

-- the mere presence of a product manufactured by the defendant which has caused damage, although he could not anticipate that this product would be found on this particular territory;
-- the rendering of a provisional or interim measure in order to adjudicate on the merits;
-- the enforcement or registration of a judgment in order to adjudicate on additional or supplementary claims.

section 4 - complex jurisdiction

141    One must ponder the value and the feasibility of including, in a worldwide Convention, provisions on a plurality of defendants, counterclaims, or warranty proceedings or applications to intervene. The Working Group concluded that these provisions are "incompatible" in the expanded framework of the future Convention¹⁶⁵ although the Special Commission of June 199