The Hague Judgments Convention: a leap of faith?

Klaus Oblin
OBLIN Attorneys at Law, Vienna

Arslanbeg Nyyazlyyev
OBLIN Attorneys at Law, Vienna

The 2019 Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (‘the Convention’) was approved by the Hague Conference on Private International Law (HCCH) on 2 July 2019, following eight years of negotiations. It seeks to streamline the process of recognising and enforcing court judgments across international borders, promising to enhance legal certainty, reduce costs, and save time for businesses and individuals involved in international disputes.

As of March 2024, the United States, North Macedonia, Israel, Costa Rica, Russia, Montenegro and, most recently, the United Kingdom, have all signed the Convention. It came into force between the EU Member States (excluding Denmark) and Ukraine on 1 September 2023. Uruguay ratified it on the same date.

In order to become a member of the Convention, a state must file a notification with the HCCH register. Once the notification has been lodged, the Convention will become operative for that state on the first day of the month that follows a 12-month period.

The scope

The Convention’s ambition is commendable; it aims to facilitate global trade and investment by ensuring that judgments made in one signatory country can be recognised and enforced in another with minimal friction. The Convention complements the 2005 Hague Choice of Court Convention, and the 1965 Hague Service Convention. However, the Convention's scope is notably limited. Article 1(1) states that it applies exclusively to civil or commercial matters, deliberately excluding criminal, revenue, customs, or administrative matters.

Moreover, Article 2 lists specific exclusions, including:

• insolvency, composition, resolution of financial institutions, and analogous matters;
• company validity and decision-making;
• privacy and intellectual property;
• certain antitrust matters;
• arbitration and related proceedings.

Article 3(1)(b) provides a definition of a ‘judgment’, and it refers to only to the decisions ‘on the merits given by a court, whatever that decision may be called, including a decree or order, and a determination of costs or expenses of the proceedings by the court (including an officer of the court).’ It does not apply to interim measures such as an interim injunction, which from a plaintiff’s perspective will hinder the enforcement of an interim award of damages.

Article 10 also mentions the exclusion of judgments for damages that do not compensate a party for the actual harm suffered (eg judgments for exemplary or punitive damages).

Recognition and enforcement

The Convention's procedural framework for the recognition and enforcement of judgments is designed to be straightforward, setting out a list of criteria that, if met, obligate signatory states to enforce foreign judgments. Article 5(1) of the Convention outlines thirteen bases for recognition and enforcement. If any of these requirements are satisfied, a judgment is eligible for recognition and enforcement. These bases include:

• Domicile – the judgment debtor is habitually resident and/or holds their principal place of business in the State of origin.
• Consent – the judgment debtor expressly consented to the court of origin’s jurisdiction.
• Waiver – the judgment debtor waived any jurisdictional objections by arguing the merits in the State of origin without contesting jurisdiction.
• Real Property – the judgment ruled on a lease of immovable property within the court of the State in which the property is situated.

Additionally, Article 7 allows for the enforcement to be refused on several familiar grounds, including:

• Service – the judgment debtor was not notified with sufficient time to arrange for a defense, unless the defendant appeared and defended their case without disputing the notice in the originating court, and if the law of the State of origin allows contesting the notice.
• Fraud – the judgment was obtained by fraud.
• Public Policy – recognition of the judgment would be manifestly incompatible with the requested State’s public policy.
• Procedural Fairness – the proceedings that produced the judgment were not compatible with fundamental procedural fairness in the Requested State.
• Inconsistent Judgment – the judgment is inconsistent with an earlier judgment given by a court of the requested State between the same parties.

Articles 12-14 of the Convention specify the procedure that must be followed by those seeking recognition of a judgment, including the documents to be produced and the fees to be paid. As a rule, if the documents are not in an official language of the requested State, they must be accompanied by a certified translation into an official language of the requested State, unless the requested State's law provides otherwise.

Declarations made by Contracting States

The Convention allows Contracting States to make declarations that limit its application in a variety of circumstances. Article 17 states that ‘a State may declare that its courts may refuse to recognize or enforce a judgment given by a court of another Contracting State if the parties were resident in the requested State, and the relationship of the parties and all other elements relevant to the dispute, other than the location of the court of origin, were connected only with the requested State.’ In simple terms, recognition may be refused if the dispute has no international element.

Under Article 18, a Contracting State may declare that it will not apply the Convention to judgments involving a specific subject matter. This carve-out is between that State and the other Contracting States. According to Article 19, a Contracting State may also refuse to have a reciprocal relationship with another Contracting State by notifying the depositary that another State's ratification will not result in the establishment of relations between them.

It is worth noting that according to Article 30, declarations can be made at any moment after signing, ratifying, accepting, approving, or acceding to the Convention. They can also be changed or withdrawn. As a result, the scope of applicability of the Convention may change at any time.

Therefore, the practice of selective ‘à la carte’ participation presents a notable challenge to the integrity of the Convention. Although this approach honours national sovereignty, it potentially undermines the Convention's objectives by compromising its effectiveness and uniformity. Consequently, it risks engendering a fragmented international legal framework, as opposed to fostering a unified and coherent system. For example, in this regard, the UK government declined to make any declaration removing insurance matters from the Convention’s scope, stating that ‘making a declaration is likely to restrict the scope of the 2019 Convention, which could in turn solicit reciprocal declarations by other Contracting States, undermining the Convention's purpose and objectives.’

Conclusion

The Convention is a milestone in the ongoing effort to facilitate international legal cooperation. Its objectives are noble, and its potential impact is significant. Yet, its success depends on widespread ratification and the resolution of critical issues relating to its scope, procedural mechanisms, and the harmonisation of its application across diverse legal systems. As it stands, the Convention is a step forward, but it also highlights the challenges of creating a truly global framework for the international recognition and enforcement of judgments. The path ahead will require careful navigation, balancing national interests with the broader goal of international legal cooperation.