The State Department web site below is a permanent electronic archive of information released prior to January 20, 2001.  Please see www.state.gov for material released since President George W. Bush took office on that date.  This site is not updated so external links may no longer function.  Contact us with any questions about finding information. NOTE: External links to other Internet sites should not be construed as an endorsement of the views contained therein.

Conclusions of the Second Special Commission Meeting On the Recognition and Enforcement of Foreign Judgments In Civil and Commercial Matters

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

INTRODUCTION

1    The Special Commission on the recognition and enforcement of foreign judgments in civil and commercial matters, which had met for the first time from 20-24 June 1994, held its second meeting from 4-7 June 1996. As at the first meeting, 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.

2    At its meeting in June 1994, the Special Commission had "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 had recommended that the Special Commission on general affairs and policy of the Conference should include this question on the agenda of the future work of the Conference, to be adopted at the Eighteenth Session. It had also expressed the desire 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" (cf. Prel. Doc. No 2: Conclusions of the Special Commission of June 1994). The Special Commission on general affairs and policy of the Conference, which met from 20-23 June 1995, had reaffirmed the importance of the topic. It in fact agreed that the topic of jurisdiction and recognition and enforcement of judgments in civil or commercial matters should be placed on the agenda of the Conference for future work, and a large majority favoured its inclusion as a first priority. "There was broad support to convene a [second] such meeting [of the Special Commission on the enforcement of foreign judgments] in the spring of 1996" (cf. Conclusions of the Special Commission of June 1995 on general affairs and policy of the Conference, Prel. Doc. No 9 of December 1995 for the attention of the Eighteenth Session).

3    The Special Commission had considered the following preliminary documents, drawn up by the Permanent Bureau:

Prel. Doc. No 1: Annotated checklist of issues to be discussed at the meeting of the Special Commission of June 1994

Prel. Doc. No 2: Conclusions of the Special Commission of June 1994

Prel. Doc. No 3: Note on the question of "forum non conveniens"

Annex A - Document submitted by Australia

Annex B - Document submitted by Canada

Annex C - Document submitted by the United States

Annex D - Document submitted by the United Kingdom

Annex E - Report by Professor J.J. Fawcett

Addendum I - Addition to Annex A

Document submitted by Australia

Addendum II - Translation in French of Annex D

Document submitted by the United Kingdom

Prel. Doc. No 4: Note on the recognition and enforcement of decisions in the perspective of a double convention with special regard to foreign judgments awarding punitive or excessive damages

Annex I - Document submitted by the United States

Annex II - Document submitted by Australia

Annex III - Document submitted by Canada

Annex IV - Document submitted by the United States

Annex V - Document submitted by the United Kingdom

Addendum - Translation in French of Annex V

Document submitted by the United Kingdom

In addition, the Swiss delegation submitted a document entitled "A case for The Hague" (Prel. Doc. No 5).

At the Chairman's suggestion, the Special Commission adopted the draft agenda appended to this document. Hence the meeting began with a round-table discussion.

Summary of the round-table discussion

4    Several experts stressed that the proposed examination of certain difficult questions in greater detail by the Special Commission would be particularly useful, as a contribution towards moving the debate beyond a purely bilateral discussion between the United States and Europe, in view of the fact that a considerable number of other countries had an interest in the conclusion of a convention in this domain. With reference to the Brussels and Lugano Conventions, it was acknowledged that the latter could not per se constitute a "role model", as those were conventions initially negotiated between six countries whose legal and judicial cultures were very similar; there could not be any equivalent within the universal framework in which the Hague Conference on private international law conducted its work in the field of international jurisdictional competence and the effects of judgments in civil and commercial matters.

Several experts stressed the paradox lying in a comparison between the impact of arbitral awards within a system which had been established for a great many years by a convention and had been fully successful, with foreign judgments for which -- up to the present time -- no equivalent solution had ever been found within a universal framework. The effort made by the Member States of the Hague Conference on private international law might be of great significance for international trade and international exchanges, as well as for private individuals, depending on whether or not the scope of the convention included sensitive domains such as liability in tort, particularly in regard to products liability, or even certain aspects of family law.

Possibility for a court to decline jurisdiction

5    An in-depth discussion took place on the question whether the theories known by the English term of "declining jurisdiction" might be incorporated in the framework of a double convention, as apparently favoured by the majority of the experts. Was it possible to bridge the differences in legal cultures between countries with a common law tradition and those with a civil law tradition?

The theory of forum non conveniens

6    At the invitation of the Chairman, the experts from countries familiar with the theory of forum non conveniens made additional comments on the preliminary documents.

The Australian delegation explained the changes which had taken place in the jurisprudence of the High Court in its country, especially in cases of lis alibi pendens, as summarized in Addendum I, supplementary to Annex A to Preliminary Document No 3, distributed by the Permanent Bureau. In the opinion of this delegation, the future convention ought not to make provision for a "rush to obtain a judgment"; the rule to the effect that it was always the court of first instance which had precedence was not necessarily a satisfactory rule, even if it might be supposed that within the framework of a double convention, a theory similar or close to that of forum non conveniens might play a less substantial role.

The United Kingdom delegation recalled that the theory of forum non conveniens as applied in the United Kingdom was a discretionary theory, the implementation of which might prove difficult within the context of a double convention, since at that point two extremes would have to be reconciled: firstly, fixed and rigid rules of competence and, secondly, flexibility and discretionary power attributed to the court. It agreed with the Australian delegation that a rush to initiate proceedings and hence to obtain judgment was unacceptable.

7    The subsequent discussion, in which certain experts from countries with a civil law tradition took part, showed that general acceptance of a principle of forum non conveniens might be unacceptable in the context of a double convention, but that exceptional and intermittent application might conceivably be envisaged.

8    The experts acknowledged that, despite all the efforts made by drafters of national or international legislative texts, they were never able to fully guarantee that the criteria of competence determined in abstract terms in a convention would be effectively applied in practice in every case. That is why the question arose of a mechanism providing for an adaptation -- possibly in exceptional circumstances -- in the implementation of the rules of competence laid down in the convention, by conferring certain powers upon the court seised, enabling it to refuse to exercise the jurisdiction conferred upon it under the convention. That power might in particular be useful when there were competing fora where litigation was pending, but might also be conceivable even if no litigation was pending elsewhere. A relatively simple mechanism might be envisaged, which would give full satisfaction to the litigants in specific cases: it would not be implemented unilaterally by the court seised, but in co-operation with the other courts which might possibly be concerned and/or already seised of the same dispute or a closely related dispute. Such a system ought not to be a completely open one, as that would entail the need to establish a list of criteria to be taken into consideration by the court seised. That preestablished list would increase predictability, which was an essential characteristic of rules of international jurisdictional competence, and constituted one of the fundamental advantages of a convention in that domain. Lastly, it was stressed that the mechanism to be set up would have to comply with the concepts of proper administration of justice, i.e. with due regard for all the parties to the dispute (both the applicant and the defendant), as well as an economic use of the means at the disposal of judicial systems; the latter were universally experiencing increasing difficulties in having to deal with complex and more and more numerous disputes, requiring ever greater knowledge on the part of the court concerned.

9    A large number of experts from countries with a civil law tradition stressed that the possible acceptance of a mechanism similar to that of the forum non conveniens would largely depend on the bases for assuming jurisdiction which were adopted in the provisions of the convention. Several speakers stressed that the forum non conveniens was not conceivable within the framework of courts with exclusive competence, but only where competing fora existed. Similarly, certain speakers maintained that a theory of the forum non conveniens would be unacceptable when the court seised was that of the defendant's domicile -- a universally accepted rule which ought not to be subjected to a risky procedure such as the mechanism of the forum non conveniens.

10    However, it was suggested by certain experts that if the theory of the forum non conveniens was considered as a clause providing for exceptions, there might be cases in which the defendant's court had no connection with the dispute other than as the domicile of the defendant; in that event, the latter court might prove to be highly unsuitable for ensuring a proper administration of justice. In the view of these experts, it was consequently conceivable that even if the court seised were the court of the domicile of the defendant, a mechanism similar to that of the forum non conveniens might possibly be applied.

Several experts were in agreement that the system of a clause providing for exceptions might be acceptable - certain analogies were drawn with clauses providing for exceptions in the case of conflict of laws - despite the fact that this system of forum non conveniens was not necessarily familiar to countries with a civil law tradition, even if circumstances did exist in which a case was transferred from one court to another within the framework of one and the same judicial system. But if it were possible to envisage a transfer of a case as a result of the application of the clause providing for exceptions under discussion, it would also be necessary to establish the impact of such a transfer on a very important issue, i.e. that of the limitation period.

Lis pendens - related causes of action

11    Several experts expressed their disagreement with the intransigent wording used, in connection with lis pendens, in Article 21 of the Brussels Convention (which was identical in the Lugano Convention). Several experts were in favour of a clause similar to the provision contained in Article 22 of those same Conventions.

Choice of court clauses and forum non conveniens

12    A discussion subsequently took place as to whether it was possible to adopt a mechanism such as forum non conveniens in regard to choice of court clauses. A consensus emerged to the effect that party autonomy was of paramount importance and had to be protected from any interference on the part of the court, other than an assessment of the validity of the clause by the latter, in the light of the criteria to be laid down in the convention.

13    It was, however, suggested by certain experts, in particular from countries with a common law tradition, that in certain cases (in particular action by third parties) the choice of court clauses might be non-invocable: for example, a party receiving third party notice in a case ought not to be able to rely on the choice of court clause agreed with the party to the case which was giving third party notice.

14    It was also stressed that the Brussels Convention did not settle the problem arising in the event of a choice of court clause and of lis pendens. It was suggested that that issue should be studied in a future convention.

The question of reflex effects

15    The Brussels and Lugano Conventions, in the context of exclusive jurisdiction, did not provide for a case in which the closest connections are to be found outside the treaty territory. That would be a reflex effect, enabling the court to declare that it lacked jurisdiction.

The discussion on this issue was relatively short; certain experts said that the negotiations on the forthcoming convention might show that there was no need for exclusive competence and, in that case, called in question the hypothesis of the reflex effect. Furthermore, according to an interpretation of the Brussels Convention advocated by certain experts, no flexibility or lacunae existed in the operation of this Convention with regard to exclusive competence, so that the so-called reflex effect problem did not arise.

Problems in the event that the seised court were to refuse to exercise its jurisdiction in favour of a court situated outside the treaty territory

16    Several experts then stressed the obvious danger inherent in such a system, which might prevent the recognition and enforcement of the judgment to be pronounced, since in a certain number of countries (Denmark, Norway, Finland, Sweden and the Netherlands in particular), no foreign judgment could be recognized or enforced if the country of the original court was not bound by a treaty with the country of the court addressed.

This problem was considered very serious by certain experts, even if it was proposed that within the framework of the future convention, a court which refused to exercise its jurisdiction might be required to demand guarantees that the judgment be enforced by the defendant.

Anti-suit injunctions

17    This question, dealt with in Preliminary Document No 3 under paragraph VIII and in the Fawcett Report, pages 63-65, was never discussed within the framework of the negotiations on the Hague Convention of 1 February 1971 on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters, nor in the context of the negotiations on the Brussels and Lugano Conventions. The question arose whether, within the framework of the negotiations on the future convention, it should be decided that such injunctions should continue to be possible or, a contrario, should be ruled out.

The experts considered that this question, which was sensitive per se, required greater study and that it was therefore not appropriate, in the context of the work of the present Special Commission, to reach a decision.

"A case for The Hague" (Prel. Doc. No 5)

18    At the invitation of the Chairman, the Swiss delegation provided some explanations in regard to the document it had submitted to the Special Commission on the Granville Trust case. In fact, the issues raised by this case might be summarized under three headings:

-- a problem of jurisdiction;
-- a problem of application and interim measures of protection;
-- questions of service contrary to the principles of the Hague Convention of 15 November 1965 on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters.

The Swiss delegation stressed that at least as regards the first two questions, a future convention such as seemed likely to emerge from the work of the Special Commission would have made it possible to prevent the court seised first from reaching the decisions mentioned in the document.

19    From the ensuing discussion on the case submitted by the Swiss delegation, it was apparent that extremely sensitive questions would have to be discussed and, if possible, settled within the framework of the future convention such as, in particular, the question of the "Mareva injunctions" and that of the "forum arresti".

20    Several experts also emphasized the difficulty created by the fact that international conventions were applied in different ways by certain countries.

The Special Commission then acknowledged that one of the essential requirements to be considered in the course of the negotiations was a mechanism to ensure a uniform interpretation of the future convention, even if it had to be recognized that it was impossible to set up a mechanism similar to the one drafted for the Brussels Convention in the additional Protocol, conferring jurisdiction in regard to its interpretation upon the Court of Justice of the European Communities.

Judgments awarding multiple or excessive damages

21    The United States delegation drew attention to a recent decision (20 May 1996) delivered by the United States Supreme Court in the case BMW v. Gore, described in a study carried out by Professor Ronald E. Brand entitled "Punitive Damages and the Recognition of Judgments", made available to the experts during the Special Commission. In the light of this decision, future verdicts in regard to damages might be reached in a different way.

The United States delegation also pointed out that if a detailed study were to be made of jurisprudence in the various states of the United States, almost all the judgments of first instance had been substantially reduced or annulled on appeal. Such jurisprudence, placed in perspective by the decision of the Supreme Court of 20 May 1996, might indicate that the question of excessive judgments would in future no longer be an issue.

22    However, several delegations expressed doubts about the optimistic conclusions presented in this connection, all the more so in view of the fact that the United States Supreme Court decision had been delivered by a simple majority of five judges to four, and that, even among the majority, certain judges had signed a statement of grounds which differed from the one prepared by the judge who had drafted the decision.

23    Consequently, the Special Commission considered that the problem of excessive judgments still existed and that it ought to be discussed within the framework of the future convention, with a view to laying down precise rules in that connection. Several experts none the less felt that the terminology used should be more precise. In particular, it was proposed that a distinction should be made between three hypotheses:

-- punitive damages, the specific characteristic of which is that they are not compensatory;
-- multiple damages (for example in anti-trust disputes in the United States) which constitute a different category of punitive damages, but which are calculated on the basis of a multiplying factor in relation to the initial compensatory damages awarded to one party in the dispute;
-- excessive damages, normally of a compensatory kind, but which are merely considered excessive by courts other than the one having made the award.

24    Several experts recognized the danger of allowing the court addressed (i.e. the court instructed to give effect to a foreign decision) to review the amount of damages awarded by the original court (i.e. the court which had made the decision). That would constitute a step down the slippery slope leading to a review of the merits.

Furthermore, it was stressed that this problem might be solved, not by the introduction of a clause providing for a review of the merits -- even a limited review would in itself be dangerous - but by means of a general clause to ascertain that no conflict with public policy existed.

25    A number of experts stressed the relevance of a provision such as the one proposed within the framework of the bilateral treaty between the United Kingdom and the United States under Article 8A (cf. Prel. Doc. No 4, under IV). It was nevertheless made clear that this text did not settle the question of punitive damages, but solely concerned the amount of excessive damages.

26    Certain experts considered that it would perhaps be preferable simply to exclude judgments comprising punitive or excessive damages from the scope of the convention. However, other experts stressed that sensitive questions of definition would have to be settled in the convention, with all the difficulties associated with the drawing of boundaries between a judgment awarding acceptable damages and a judgment awarding excessive damages that that implied. A consensus was reached to the effect that notwithstanding the foregoing, such a difficulty in regard to boundaries did not exist, or existed to a lesser extent, in regard to punitive or multiple damages (the first two hypotheses mentioned under paragraph 23 above).

27    Finally, it was apparent from the debate that a majority of experts seemed to be in favour of the inclusion in the future convention of a clause dealing specifically with excessive judgments, so as not to leave them to the discretion of the court addressed, solely via its public policy.

The criteria which ought to be taken into consideration by the court addressed in reviewing the original decision

28    Introducing this question, the Permanent Bureau emphasized that within the context of the consensus which seemed to be emerging within the Special Commission in favour of an attempt to draft a double convention, the question of the extent of the control exercised by the court addressed over the original court cropped up in a particularly acute form. Hence it was essential to study the various criteria which might be made available to the court addressed under the future convention.

In the course of this discussion, several experts reverted to the sensitive question of a uniform interpretation of the future convention. It was pointed out that there could be no equivalent to the system laid down in the Brussels Convention (except of a very remote kind) in a universal convention negotiated within the Hague Conference on private international law and under its auspices.

A consensus was rapidly reached to the effect that greater control than that provided for by the Brussels and Lugano Conventions was essential in the context of a universal convention.

Control of the competence of the original court

29    In regard to indirect competence, it was suggested that a distinction might be made between judgments delivered by default and judgments delivered after adversarial proceedings. Only the former would entitle the court addressed to verify the indirect competence. However, it was pointed out that such a provision would result in a negative boomerang effect, as it would obviously encourage defendants to fail to appear before the original court, thereby inevitably entailing a proliferation of proceedings.

It was also stressed that the extent of the control to be accorded to the court addressed would in fact be dependent on the list of bases for assuming jurisdiction set forth in the first part of the convention. In this connection, several experts reverted to the hypothesis that there might be a series of bases for assuming jurisdiction, described as a "grey area". This hypothesis was contested by other delegations, insofar as it called in question the consensus to the effect that the efforts of the Special Commission and of Member States ought primarily to be focused on the establishment of a double convention containing one single list of bases for assuming jurisdiction (called a "white" or "green list"), together with competences which were excluded (called "black" or "red list").

But, in this context, the control of indirect jurisdiction would then exclusively relate to the rules in the convention and hence to its interpretation. It was stressed that any monitoring of the application of the convention would constitute an acknowledgement that the interpretation given by the court addressed under the convention would have precedence over the interpretation initially given by the original court. The question was then raised as to the reasons and principles in the light of which the decision of the court addressed might take precedence over the decision of the original court in that connection.

30    It was then suggested by several experts that questions of factual appraisal should be distinguished from questions involving appraisal of the law. In regard to the former, the findings of the original court would bind the court addressed; the latter's decision on the interpretation of the legal factors would necessarily have to be based on the findings of fact on which the original court had based its judgment.

31    Furthermore, the Special Commission also discussed the question of the scope of the court's duties. Ought the court to exercise control over jurisdiction of its own accord? Or on the contrary, ought it solely to pronounce on the bases for exercising control relied on by the defendant in regard to the proceedings for recognition or enforcement? In that connection, several experts drew an analogy with the New York Convention of 1958, Article 5 of which made provision for two categories of control, the one being subject to the action of the defendant, whereas the other could be raised as a matter of course by the court addressed. Other experts, on the other hand, denied any validity to the analogy with the New York Convention of 1958. A consensus seemed to emerge to the effect that the future convention might lay down a minimum with which Member States had to comply in controlling the original decision, while giving them an option to be more generous, either within the framework of bilateral treaty conventions, or within the framework of their general law, as provided by Article 7 of the New York Convention.

32    Certain delegations recalled that the rule in Article 18 of the Brussels Convention appeared to be satisfactory and ought to be included in the future convention. In that event, the control exercised over the competence of the original court by the court addressed, in proceedings in which the defendant appeared, would be restricted to cases in which the defendant had in fact contested this point before the original court. The vast majority of experts seemed to favour this approach.

33    The discussion was then widened to cover the problem of jurisdiction within the framework of a non-unified country, but that issue was not discussed in depth. At that point, the Special Commission agreed to leave the question in abeyance for future work.

Control of the law applied by the original court

34    Most of the experts were against such control, except perhaps as regards the provision of a clause along the lines of Article 27, point 4, of the Brussels Convention, which only covered preliminary questions in domains excluded from the Convention itself.

Due process of law and right of defence

35    Several delegations argued that questions of negotiation which were directly linked with the concept of "natural justice" or "due process" ought to be the subject of specific clauses in the convention. It was, however, suggested that a mere reference to the Hague Service Convention of 1965 might possibly be sufficient.

36 The Commission then discussed the specific point of the requirement to provide the grounds for a judgment, as evoked on numerous occasions in French jurisprudence, and in particular in several relatively recent decisions of the court of cassation. In the opinion of several experts, in the event that certain bases for exercising control over a foreign decision were upheld, it might be necessary to provide some grounds for the judgment in order to exercise such control.

37    The experts then reverted to the discussion on judgments by default. In particular, they made it clear that if the convention were to contain a specific clause for such decisions by default, it would then be necessary to provide a definition of the latter in the convention. However, other experts maintained that such a definition might be extremely tricky and might create more problems than it solved.

Independence and impartiality of the original court

38    This basis for exercising control is particularly familiar in the United States, where it was introduced by means of the model law on the recognition and enforcement of foreign judgments. In answer to a question as to the conditions under which an assessment of the impartiality and independence of the original court was conducted by the court addressed, the United States delegation stated that, to the best of its knowledge, no specific application had been made of this basis for exercising control. Furthermore it was recalled, in this connection, that if a decision were reached to insert such a clause into the convention, it would be extremely difficult to word it in satisfactory and simple terms.

Extent of the scope of the convention

39    The Commission first of all discussed the question whether competition law should be excluded from the scope of the convention. It was clearly indicated that any administrative procedure might be excluded, or any procedure of an administrative nature concerning the application of competition law per se, but that all judicial actions might be included (i.e. nullity of contract, damages, injunctions, ...) even if those actions were based on an infringement of competition law. Clearly there would none the less still be difficulties in defining the boundaries between those various actions, except perhaps through the intermediary of a precise definition of the concept of the jurisdiction which had to issue the decision, in order for the latter to be recognized or enforced under the aegis of the future convention.

40    The Commission then considered whether the convention ought to apply to injunctions. It was recalled that in the United States, the full faith and credit clause did not apply to anti-suit injunctions. However, it was recalled that a large number of judgments on the merits contained injunctions to act or to refrain from acting, and that it would not be appropriate to exclude those injunctions from the scope of the convention. On the other hand, it would perhaps be possible to exclude injunctions which were equivalent to provisional measures. In all likelihood, the future convention ought to include a provision concerning provisional measures and measures of protection. In that connection, mention was made of the work carried out within the International Law Association and its Committee on civil and commercial procedure which, at its two previous meetings, had discussed the principles applicable to competence in regard to provisional measures and measures of protection. The provisional text of those principles, to be proposed at the Helsinki meeting in August 1996 although not as yet adopted by the Working Group, was distributed to delegations by way of information.

41    The Commission also discussed whether intellectual property should be included. In much the same way as with competition law, it was recalled that in regard to intellectual property, the various possible actions were intimately linked: it would be extremely difficult to attempt to split up what in fact constituted a global "macro-economic" function and hence impossible to split up directly linked actions.

42    The Commission also examined the question whether family actions should be excluded. Although several experts acknowledged that family law certainly created special problems and should therefore be excluded, the Commission recognized that it would be prejudicial not to include maintenance obligations, which were purely financial obligations and did not involve the same difficulties as other questions of family law. Certain experts pointed out that if, on the other hand, such questions regarding maintenance obligations were to be excluded, that would in their view be a retrograde step. In that connection, a very special problem was raised, i.e. the non-acceptance by certain countries of the forum of the creditor in connection with maintenance obligations. It would be necessary to ensure the acceptability of this forum within the framework of the future convention.

[end of document]