The recognition and enforcement of private judgments in civil and commercial matters remains to this day, a patchwork of international conventions, local laws and rules which hinder and obstruct the efficient enforcement of civil and commercial judgments and discourage businesses from enforcing their rights at law in foreign jurisdictions.
The 2019 Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (also known as the “Judgments Convention” or the “Convention”), adopted by the Hague Conference on Private International Law (HCCH) on the 2nd July 2019 aims to make this a thing of the past. The new Convention which has the potential of being a game changer in cross-border enforcement of judgments, strives to create a single common and global framework for the recognition and enforcement of foreign judgments in all the jurisdictions which will eventually adopt the Convention.
Shorter timeframes, clearer rules and better predictability of the desired outcomes are all features of the Convention which have the potential of significantly reducing litigation costs and the necessity of resorting to expensive international arbitration in the absence of cost-effective enforcement.
Main features of the Convention
The Convention regulates the recognition and enforcement of civil and commercial judgments, with a number of exceptions including privacy, defamation, insolvency, family law matters, IP, antitrust and carriage of goods amongst others. Nonetheless these limitations will not apply in cases where these issues concern preliminary issues or where such issues are raised by respondents in their defence.
The Judgments Convention applies to decisions on the merits of the case (including determination of costs) but does not apply to interim measures or orders which are excluded from the scope of the Convention.
Similarly to the Recast Brussels Convention, recognition and enforcement may be postponed or refused if the judgment in question is under appeal or review, or if the time period for such ordinary review has not expired.
Judgments are eligible for recognition and enforcement in terms of the Judgments Convention if a link between the person against whom enforcement is sought and the state of origin is proven. This can be done by proving one of the following requirements (amongst others):
- That person’s habitual residence, principal place of business or branch, or the place of performance or concerned immovable property was in the state of origin; or
- The person against whom recognition is sought was the claimant on which the judgment is based
- The defendant expressly consented to the jurisdiction of the court of origin in the course of the proceedings in the judgment given;
- The defendant argued on the merits before the court of origin without contesting jurisdiction within the timeframe provided in the law (unless it is evident that an objection to jurisdiction would not have succeeded under that law).
In terms of the Convention, courts will only be able to refuse recognition and enforcement on the grounds specified in the Convention and no review on the merits of the case is allowed, unless this is necessary for the application of the Convention.
The grounds for refusal of recognition and enforcement in terms of the Convention include (amongst others):
- the defendant was not properly notified, unless the defendant participated in the proceedings without contesting his notification;
- the defendant was notified in the state of enforcement in a manner that is incompatible with fundamental principles of service of documents in that state.
- Public policy. E.g. where proceedings in the court of origin are incompatible with fundamental principles of procedural fairness of the state of enforcement;
- Where the proceedings in the court of origin were contrary to a choice of court agreement;
The next step in international litigation?
The success or failure of this Convention obviously depends on whether States will be willing to ratify this Convention, effectively ceding a part of their jurisdiction and sovereignty in favour of a more simplified system of recognition and enforcement of civil and commercial judgments.
If the Convention is widely ratified, this will undoubtedly have a huge effect on international dispute resolution providing parties with a viable, feasible and cost-effective alternative to international arbitration. However, it is important to note that states have been given the option of picking and choosing which states’ judgments they will recognize, and which they won’t in terms of the Convention – possibly creating a disjointed framework instead of a clear single framework for all states involved.
Author: Thomas Bugeja, Associate, Corporate and Commercial Department