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Conclusions of the Special Commission of June 1994 on the Question of the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters

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1    The Seventeenth Session had taken the following Decision:

a    Decides to include in the Agenda for the work of the Conference the question of the recognition and enforcement of foreign judgments in civil and commercial matters;

b    Requests the Secretary General to convene as soon as is feasible a Special Commission 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;

c    Leaves it to the Special Commission on general affairs and policy of the Conference to make recommendations to the Eighteenth Session on the further steps to be taken.

2    The Commission met from 20-24 June 1994. Mr Gustaf Möller, Expert of Finland, was elected Chairman; Mrs I.M. de Magalhães Collaço, Expert of Portugal, and Mr Peter Nygh, Expert of Australia, were elected Vice-Chairmen. The Commission proceeded to a broad exchange of views on the desirability and the feasibility of drawing up on a worldwide scale a possible convention on the recognition and enforcement of decisions in civil and commercial matters.

3    Finally, on the basis of a common proposal (Work. Doc. No 2 submitted by the Experts of Spain, the United States, France and Switzerland),

"The Special Commission concluded that it would be advantageous to draw up a convention on jurisdiction, recognition and enforcement of foreign 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".

4    In addition, following a discussion on the schedule of the work which might be undertaken,

"The Special Commission considered 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 take a decision to that effect".

* * * * *

5    The discussions which resulted in these recommendations dealt with various subjects and may be summarized as follows.

The nature of a possible convention

6    The experts agreed that if a convention were to be drawn up it would be desirable to go further than a "simple convention" such as the Hague Convention of 1 February 1971 on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters or the Inter-American Convention of 8 May 1979 on Extraterritorial Validity of Foreign Judgments and Arbitral Awards as it was complemented by the La Paz Convention of 24 May 1984 on Jurisdiction in the International Sphere for the Extraterritorial Validity of Foreign Judgments. It was agreed that it would be preferable to establish not only rules on the enforcement of decisions, but also rules on judicial jurisdiction at the stage of the initial litigation. It seemed that in such a convention there might be established a list of bases for assuming jurisdiction which might be accepted and a list of bases, the utilization of which might be prohibited. The issue was discussed as to whether it should be provided in addition that each State might utilize bases for assuming jurisdiction which would be neither accepted nor prohibited by the convention. Finally, the tendency was to reject such a possibility and to favour the preparation of a double convention limiting itself, as do the Conventions of Brussels and Lugano, to bases for assuming jurisdiction which are accepted and those which are rejected.

Substantive scope of a convention

7    A consensus emerged in favour of excluding from the scope of application of a convention the status and the legal capacity of natural persons, rights in property arising out of a matrimonial relationship, wills and succession, bankruptcies and other analogous proceedings, social security and arbitration, matters expressly excluded from the Brussels and Lugano Conventions as well as from the Hague Convention of 1971.

8    On the contrary, the Commission was divided on the issue of whether maintenance (support) obligations should be included, as they were in the Brussels and Lugano Conventions, or excluded as they were from the Hague Convention of 1971 and the Inter-American Convention. Certain experts felt that the question was too closely tied with matters of family law which are to be excluded from the scope of the convention and that in any case there already existed Hague Conventions, an Inter-American Convention and the New York Convention to deal with these issues. Others felt that the inclusion of this topic in a convention might encourage ratifications.

9    A discussion took place on the question of whether the scope of the convention should be limited to contractual obligations or, on the contrary, whether it should be extended to extra-contractual obligations and to civil liability for torts. Several experts expressed reticence in respect of an obligation to enforce judgments for excessive or punitive damages. In the end it seemed that while certain restrictions might be applied in the enforcement of such judgments, it would be desirable to include civil liability for torts within the substantive scope since, if the opposite were true, the convention would lose much of its interest.

10    In respect of matters of antitrust law, competition law and environmental law, no consensus could be reached on inclusion or exclusion. These questions were to be made the subject of study in more depth on the occasion of a second meeting.

Bases for assuming primary (direct) jurisdiction which might be retained

11    The Commission discussed in a very general way the bases for assuming primary jurisdiction which might be retained in a possible convention. The enumeration which follows is neither limitative nor definitive and simply illustrates the tendencies which were revealed during the discussions.

12    A consensus emerged in favour of accepting a basis for jurisdiction founded on the links which a defendant who is a physical person has with the forum. The link may be the domicile, a legal concept, the habitual residence, a factual concept, or other elements to be determined.

13    Likewise, a basis for assuming jurisdiction founded on a link between a corporation or other legal entity and the forum should be retained; this link might be the seat (statutory or factual), the place of incorporation, the principal place of business, or some other criteria to be determined and specified.

14    It was also thought that, according to the example offered by other international conventions, a basis for special jurisdiction might be accepted in respect of an enterprise at the place where it has an establishment or branch, in connection with disputes concerning the activity of such establishment or branch.

15    It was accepted that the place where an immovable is situated may be a basis for assuming jurisdiction in respect of rights in rem in immovable property. The question was, however, seen in a restrictive way and issues bearing on ownership itself and questions of leases and rentals were reserved.

16    There was no opposition to the idea suggested of taking up a rule for assuming jurisdiction which appeared already in the Conventions of Brussels and Lugano, this being the domicile or the place of establishment of a trust for litigation concerning the trust relationship.

17    As concerns civil liability for torts, to the extent to which this matter might be included within the scope of the convention, a consensus emerged to accept, following the example of other conventions, the special jurisdiction based on the forum delicti commissi but only where the situation is localized in a single State. The situations referred to as torts at a distance, where the activity giving rise to the damage and the occurrence of the damage take place in different States, were not discussed and are entirely reserved.

18    Mention was also made of the possibility of accepting the jurisdiction of a court before which a principal claim has been brought, to decide a counterclaim arising from the same situation. Other derivative bases for assuming jurisdiction, such as jurisdiction over co-defendants or jurisdiction over a claim for contribution or indemnification, were mentioned only briefly. Certain experts felt that these other bases for assuming jurisdiction were quite acceptable in a regional framework but might create difficulties on a worldwide scale.

19    A consensus emerged to recognize in principle the jurisdiction of a court which has been chosen by the parties. Also mentioned was the possibility for the parties to agree that the chosen court would have exclusive jurisdiction. Remaining entirely open are the problem of the form of the agreement choosing a court and the problem of its substantive validity, particularly in the presence of competing bases for jurisdiction which are protective of certain interests (for example, consumer contracts, employment agreements).

20    Also mentioned was the rule known in comparative common or treaty law, according to which voluntary appearance by the defendant is a basis for the jurisdiction of the court where the lawsuit is pending. However, it was noted 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. In the thought of the Commission, abuse of economic power or other unfair means may moreover be taken into account in the application of the validity of agreements on choice of court, whether they be voluntary or implied.

Other bases for assuming jurisdiction

21    Without entering into the details, the Commission mentioned the possibility of establishing bases for assuming jurisdiction which might have an exclusive character in connection with the validity or dissolution of corporations or other legal entities, in connection with entries in public registers or in connection with the enforcement of judgments. These bases for assuming jurisdiction would draw their exclusive character from their very nature and would be founded on good administration of justice.

22    Certain experts also suggested without being contradicted the utility of establishing particular bases for assuming jurisdiction founded on the need for protection of the weaker party, a concept which would have to be subject to renewed reflection in a worldwide framework. As examples were given protection of consumers or of insured persons for certain types of insurance, the protection of workers or yet the protection of maintenance creditors in case this subject were to be included within the scope of the convention.

23    Finally, for contracts, the establishment of a special basis for assuming jurisdiction was not excluded but it was the subject of a very limited discussion. Attention was drawn to the difficulty to which the rules of the Brussels and Lugano Conventions, as interpreted by the Court of Justice of the European Communities, had given rise, but the question of a special basis for assuming jurisdiction over contractual questions remains entirely open.

Bases for assuming jurisdiction which should not be utilized as bases for assuming general jurisdiction

24    A consensus emerged to agree that certain bases for assuming jurisdiction ought not to be utilized for assuming general jurisdiction.

25    The links which the plaintiff has with a State by reason of his domicile or his habitual residence ought not to be able to found by themselves general jurisdiction on the part of the courts of that State. On the other hand, the domicile or the habitual residence of the plaintiff might be taken into consideration for special or particular bases of jurisdiction, for example those which are protective of certain interests.

26    Likewise, a basis for jurisdiction founded on the nationality of one of the parties ought to be prohibited.

27    The presence of property of the defendant on the territory of the forum should not serve as a basis for jurisdiction of the courts of that State over litigation which is not concerned with such property.

28    More controverted was the question of whether general jurisdiction of the forum might be founded on the fact that the defendant carried on business within the State of the forum, without the litigation being related to such business. Some experts pointed out that in their legal systems the fact that the defendant does business through branches or establishments registered in the country founds the general jurisdiction of the local courts in respect of the parent company. In this respect a link exists between this basis for jurisdiction and that mentioned supra No 14.

29    It was pointed out that service of summons made during the temporary presence of the defendant on the territory of a State ought not to bring about jurisdiction on the part of the courts of that State.

30    It was noted that the list which has just been given is certainly not exhaustive and that there may exist other bases for assuming jurisdiction which should not be utilized as a basis for general jurisdiction. It was suggested that for informational purposes the Permanent Bureau attempt to obtain from the Member States more details in this respect. Certain experts pointed out that in any case there was no need that the list be exhaustive since in the spirit of a double convention any basis for assuming jurisdiction which does not appear in the list of those bases which are accepted ought to be rejected.

Implementation of the jurisdictional rules

31    The question of lis pendens was very briefly discussed. However, it was generally accepted that this problem ought to be dealt with in a possible convention and that the optional or mandatory character of the defense based on lis pendens ought to be the subject of particular study.

32    The Commission discussed at length the question of whether a judge who has jurisdiction according to the convention might decline to exercise such jurisdiction when he thinks that the judge of another country is better placed than he is to take a decision. Some experts pointed out that the theory of forum non conveniens formed a part of the ordinary rules of their legal systems as concerns international jurisdiction and that in general it was applied with a great deal of circumspection. Other experts expressed their reticence at the application of such a theory, pointing out in particular the uncertainty that it creates for a plaintiff who, moreover, is constrained to undergo long and costly procedures on the question of jurisdiction. It was recalled that in the case of an international convention, the bases for assuming direct jurisdiction which are accepted are deemed to have reasonable links with the cause of action. Although contested by certain experts, an opinion emerged according to which a judge who has jurisdiction in the sense of the convention ought not to be able to decline exercise of such jurisdiction in favour of the court of a non-Contracting State, since the decision of the latter court might not be able to be enforced in the other Contracting States. Finally, it seemed that a consensus might emerge in favour of allowing a limited possibility for application of the theory of forum non conveniens in specific cases to be determined and on the condition that a mechanism of co-ordination be instituted in the convention. The essence of this mechanism would be that, where the court of a Contracting State considers that the court of another Contracting State is better placed than it is to judge the case pending before it, under circumstances which might be set out in the convention, it would stay proceedings before it until that other court has declared itself to have jurisdiction. If this second court refuses to exercise jurisdiction, the first court would then have to decide the case on the merits.

Recognition and enforcement of decisions

33    The problem of the recognition and enforcement of decisions was the subject of very general discussions. The principle of automatic recognition of the decisions of Contracting States, when certain conditions are fulfilled, was mentioned but was not discussed in depth.

34    A consensus developed in favour of the institution of verification by the requested judge of the original judge's jurisdiction, this being different from the Brussels and Lugano Conventions which prohibit in principle any generalized verification. It seemed that verification in this sense would be indispensable in the framework of a worldwide convention, bringing into relation States the judicial structures of which may be very different. It was remarked, however, that if there were to be verification, it should not bear on the findings of fact on which the original court based its jurisdiction; this would follow the rule appearing in the 1971 Hague Convention on Enforcement of Judgments (which, however, makes an exception in case of a decision by default).

35    As regards the provisional or definitive character of the foreign decision, the discussion showed a certain hesitation to admit the enforcement of decisions which were not final. Indeed, to admit the contrary would require the creation of complex and heavy provisional measures in order to protect the defendant in case the decision were to be overturned in the country of origin. Finally, it seemed that in principle a possible convention should only cover foreign decisions which are no longer subject to ordinary recourse in the State of origin. It was noted that, if maintenance obligations were to be included in the convention, it would be necessary to take a particular rule in regard to decisions on these matters since such decisions are never completely final.

36    The classic grounds for refusal of recognition or enforcement of decisions known in the general law or appearing in the international conventions were not discussed. It is obviously accepted that a convention ought to contain grounds for a refusal of recognition or enforcement, but their enumeration remains open. A consensus, however, emerged to accept that in any case it would be necessary to go further than had the Conventions of Brussels and Lugano and to admit, following the example of the 1971 Hague Convention, as a ground for refusal: fraud in the proceedings.

37    In addition, the Commission paid particular attention to decisions awarding damages, the amount of which might appear to be excessive or punitive. The enforcement of such decisions might give rise to great reticence in certain Member States. The solution under which liability in tort would be excluded from the scope of the convention did not seem to be realistic, for it would deprive the convention of a great part of its interest. Finally, the idea was suggested of formulating a ground for total or partial refusal of enforcement in respect of decisions awarding damages of a punitive character or of an excessive amount. Although such a process might constitute a sort of review in full of the foreign decision, a tendency emerged towards seeking a solution along the lines indicated.

Procedure for recognition or enforcement

38    The question was raised as to whether a possible convention ought to attempt to unify the procedures for recognition or enforcement of decisions in Member States. It was pointed out that the unification achieved by the Brussels and Lugano Conventions had constituted very great progress and facilitated considerably the international circulation of judgments. However, in the framework of a worldwide convention it seemed that it would be very difficult to arrive at such a unification, although a consensus emerged to the effect that a possible convention should provide that the procedures should be expeditious.

39    In order to facilitate the tasks of the practitioners, it was suggested that a convention should provide that each Contracting State ought to indicate the jurisdiction in its country before which requests for recognition or enforcement of decisions should be brought and what are the possibilities for appeal and the periods of time for perfecting appeal within the framework of such procedures. Such indications ought to be furnished to the depositary or to the Permanent Bureau in order that the information might be distributed in the other Contracting States.

40    The necessity of assuring a uniform interpretation of the treaty's text was mentioned; several suggestions were made in this connection and the question was to be studied in more depth.

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