This chapter addresses the question of why teach arbitration, what should be taught, and how it should b e taught. It does so from the perspective of one who believes the Vis International Commercial Arbitration Moot is one of the best pedagogical tools in legal education, and in particular for teaching arbitration. I begin with comments about Professor Eric Bergston’s vision that underlies the Vis Moot. In determining that arbitration should be taught in order to train the coming generations of arbitrators and arbitration counsel, I provide five core reasons for teaching arbitration. I follow with consideration of what should be taught, which must include not only doctrine and skills, but an understanding of the importance of arbitration to the rule of law generally. I close with some brief thoughts on how to teach arbitration and the importance of fitting the method to the teacher.

INTRODUCTION

In this chapter, I address three major questions relating to the recognition and enforcement of foreign titles in common law jurisdictions:

• 1. Public policy as a ground for the refusal of recognition and enforcement of foreign titles (both judgments and arbitral awards);

• 2. Jurisdiction in actions to recognize and enforce foreign titles; and

• 3. Enforcement: searching and seizing foreign assets.

In addressing the public policy question, I pay attention first to the global framework for each, and then move to regionalism and national law through discussion of the law in each of the national reports prepared for use in compiling this general report. In addressing enforcement jurisdiction and searching and seizing foreign assets, the focus is on the law of the states represented in the national reports, as there is no real global framework for these issues. For common law states, the process of regionalism has only had a limited impact on the matters being considered. Parts of this chapter provide a broad overview, while others focus on a more limited set of countries given the information available.

I am indebted to the authors of the following national reports on which this chapter is based:

• – Australia, Richard Garnett

• – Canada, H. Scott Fairley and Ruzbeh Hosseni

• – England and Wales, Wendy Kennett

• – Ireland, M Ni Shúlleabháin

• – Israel, Ehud Brosh

• – Singapore, Tiong Min Yeo

• – United States, Ronald A. Brand

2. THE FUNCTION OF PUBLIC POLICY AS A GROUND FOR THE REFUSAL OF RECOGNITION AND ENFORCEMENT OF FOREIGN JUDGMENTS

As a matter of law, public policy is perhaps the most common ground found for the denial of recognition and enforcement of foreign judgments. It is contained in every global instrument and in every national law surveyed for this chapter. Nonetheless, as a matter of practice, it seldom results in the actual denial of recognition or enforcement.

THE GLOBAL PERSPECTIVE

The Hague Conference on Private International Law has produced three multilateral conventions in the last 50 years that deal with the recognition and enforcement of foreign judgments. The first of these is the Hague Convention of February 1, 1971 on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters.

INTRODUCTION

Chapter V of the Convention contains its final clauses. Many of these clauses contain provisions that are standard in private international law treaties generally, or in other Hague Conventions. They should be interpreted accordingly. However, some of the clauses in this Convention vary from standard clauses, and are tailored to policy objectives in this Convention.

ARTICLE 27: SIGNATURE, RATIFICATION, ACCEPTANCE, APPROVAL OR ACCESSION

Article 27 Signature, ratification, acceptance, approval or accession

1. This Convention is open for signature by all States.

2. This Convention is subject to ratification, acceptance or approval by the signatory States.

3. This Convention is open for accession by all States.

4. Instruments of ratification, acceptance, approval and accession shall be deposited with the Ministry of Foreign Affairs of the Kingdom of the Netherlands, Depositary of the Convention.

Article 27 sets forth the mechanisms by which a state may become a Contracting State to the Convention. Articles 29 and 30, discussed below, provide the similar rules applicable to Regional Economic Integration Organizations, which are not covered by Article 27.

Article 27 demonstrates a policy decision to open the Convention to wide participation. The Convention is open for signature by all states – whether or not they are Member States of the Hague Conference on Private International Law. Once a state has signed the Convention, it may become a Party by ratification, acceptance or approval.

INTRODUCTION

Chapter II consists of three articles, and contains two of the three pillars of the Convention. Article 5 provides that a court designated in an exclusive choice of court agreement shall have jurisdiction to decide a dispute to which the agreement applies. Article 6 provides that courts in other Contracting States shall not exercise jurisdiction to decide a dispute that has been allocated by such an agreement to a court in another Contracting State. The exceptions to these rules found in Chapter II of the Convention maintain a careful balance between considerations of party autonomy and the interests and abilities of States to structure their legal systems in a manner which reflects their own values.

EXCLUSIVE JURISDICTION OF THE CHOSEN COURT

Article 5(1) sets out the fundamental rule of jurisdiction under the Convention that a court designated in an exclusive choice of court agreement has jurisdiction to decide a dispute to which the agreement applies, unless the agreement is null and void. The effect of Article 5(2) is to require that such jurisdiction be exercised, unless exercise of the jurisdiction runs afoul of the limitations found in Article 5(3).

Article 5 does not apply unless a court determines that it is designated in an exclusive choice of court agreement. The issues of what constitutes an exclusive choice of court agreement and what constitutes a proper designation were addressed in the discussion of Article 3, above.

INTERPRETATION OF THE CONVENTION

INTRODUCTION

Any interpretation of a treaty must be rooted solidly in the text. This is especially so with Conventions, like the Hague Convention on Choice of Court Agreements, which arise from a consensus process of negotiation. That process places special emphasis on the words in the provisions of the Convention.

The interpretation of the Convention will be straightforward in many areas – including those areas applicable to most transactions within the scope of the Convention. However, there are issues for which the appropriate understanding of a particular consensus result is not readily apparent from the face of the text. Examples of such understandings include matters for which, after extended discussion and debate, a consensus interpretation of a provision was read into the record of the Diplomatic Conference by the chairman of the drafting committee. Another example of an area where the evidence of consensus may be found outside the face of the text involves questions upon which agreement was reached early in the negotiation of a broader convention, and where that agreement carried over to the final convention.

There are other areas, however, where interpretation will require careful consideration of the weight the text will bear when viewed as a consensus document. Thus, on some matters, the text reflects a consensus that the content of the Convention would be given an autonomous meaning, but for which it was neither possible (nor necessarily desirable) in the Diplomatic Conference to reduce that meaning to specific language.

INTRODUCTION

The Hague Convention on Choice of Court Agreements [“the Convention”] requires that courts give effect both to agreements of the parties regarding the proper forum for settlement of disputes, and to the resulting judgments. The Convention is contained in the Final Act of the Twentieth Session of the Hague Conference on Private International Law, signed on June 30, 2005, and will affect both the planning of international commercial transactions and the process of dispute settlement in the resulting relationships. The Convention, in many ways, may serve as the litigation counterpart to the very successful United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention).

This initial chapter provides context for consideration of the Convention. We first deal with the political-legal context, and then provide a history of both the legal issues and the process that led to the Convention.

THE CONTEXT OF THE HAGUE NEGOTIATIONS

Global trade, with its increase in the movement of people, goods, capital, services, and ideas across borders brings with it an increase in transnational disputes. In the absence of uniform legal rules of substance and practice, uncertainties abound in the resolution of these disputes. These uncertainties are reflected in party forum shopping and parallel proceedings, as well as in difficulties and expense in the recognition and enforcement of foreign judgments.

Problems of recognition and enforcement of home country judgments in foreign countries are of particular concern, especially for U.S. judgment creditors.

The Hague Convention on Choice of Court Agreements was completed at the Diplomatic Conference of the Hague Conference on Private International Law on June 30, 2005. While the Convention has been available for signature and ratification by Member States of the Hague Conference and for accession by other States from that date forward, it was not practical for any state to move forward in regard to becoming a Contracting State until the completion of the official Explanatory Report. With the completion of the Explanatory Report in May of 2007, the Convention is ripe for consideration by all States, and Mexico has become the first state to ratify.

We hope this book will provide a balanced and substantive look at the process that created the Convention and the resulting Convention text. We also hope the exposition on the pages that follow will prove useful to those wanting a better understanding of the Convention, as well as to those who may be involved in decisions about national positions in regard to the status of the Convention. Our participation as members of the United States Delegation that negotiated the Convention has informed our discussion. This book is not, however, intended as a participant's memoir. We have endeavored to present as complete and factual a picture of the text and its context as we are able.

We have included two appendices in this book.

INTRODUCTION

The “General Clauses” chapter of the Convention contains eleven articles that have potential for major impact on specific contracts and transactions. These include transitional rules determining when Convention provisions will apply to agreements and proceedings based on the date of entry into force of the Convention (Article 16), clarifications regarding the application of Convention rules to contracts of insurance (Article 17), a rule that no specific legalization formalities are required for a choice of court agreement to fall under the Convention (Article 18), the authorization of certain declarations states may make that will tailor the application of specific Convention rules under specific circumstances (Articles 19–22), a statement regarding the need to promote uniformity in the interpretation and application of the Convention (Article 23), authorization of Conference review of the operation of the Convention (Article 24), rules for application of the Convention in “non-unified legal systems” (Article 25), and rules governing the relationship between the Convention and other treaties or instruments of Regional Economic Integration Organizations (Article 26). As will be seen in the following discussion, a number of these provisions may have important implications for specific transactions.

ARTICLE 16: TRANSITIONAL PROVISIONS

Article 16 Transitional provisions

1. This Convention shall apply to exclusive choice of court agreements concluded after its entry into force in the State of the chosen court.

2. This Convention shall not apply to proceedings instituted before its entry into force in the State of the court seised.

INTRODUCTION

Chapter III, “Recognition and Enforcement,” contains the third pillar on which the Convention rests: a judgment issued by a court of a Contracting State designated in an exclusive choice of court agreement within the meaning of the Convention shall be recognized and enforced in other Contracting States. Although there are qualifications and conditions placed on the operation of the general rule, the thrust of the Convention is heavily in favor of recognition and enforcement. Where jurisdiction of the court of origin is based on an exclusive choice of court agreement concluded as part of an international commercial transaction, in most cases the resulting judgment will be recognized or enforced under the Convention.

ARTICLE 8(1): A JUDGMENT SHALL BE RECOGNIZED AND ENFORCED

Article 8 Recognition and enforcement

1. A judgment given by a court of a Contracting State designated in an exclusive choice of court agreement shall be recognised and enforced in other Contracting States in accordance with this Chapter. Recognition or enforcement may be refused only on the grounds specified in this Convention.

Article 8(1) states that, if certain threshold conditions are satisfied, a judgment shall be recognized and enforced by the courts of a Contracting State in accordance with the provisions of Chapter III. “Shall” means that recognition and enforcement is not discretionary, but mandatory.

DEFINING “RECOGNITION” AND “ENFORCEMENT”

The Convention provides no definition of either “recognition” or “enforcement.”

INTRODUCTION

The law in the United States on the recognition and enforcement of judgments has undergone substantial discussion and analysis in the past decade. Negotiations at the Hague Conference on Private International Law regarding international instruments on jurisdiction and the recognition and enforcement of judgments in part acted as a catalyst for this attention. When the Hague negotiations were in process, the American Law Institute (ALI) undertook to draft proposed federal implementing legislation for the anticipated treaty. This project also considered the possibility that a treaty would not be concluded, and developed an alternative proposal for federalizing the recognition and enforcement of judgments generally. When the Hague project turned to a Convention on Choice of Court Agreements, the ALI project focused on this second track, and concluded a proposed federal statute that does not include treaty implementing legislation.

The substantive rules on recognition and enforcement of foreign judgments in the United States largely have been left to state law. Thus, when the ALI began moving toward federalization of the law in this area, an equivalent effort was undertaken to reinforce state law on the recognition and enforcement of judgments. In 1962 the National Conference of Commissioners on Uniform State Laws (NCCUSL) had promulgated the Uniform Foreign Money-Judgments Recognition Act. Although thirty states (plus the District of Columbia and the Virgin Islands) had enacted the Uniform Act, others had not.

CONVENTION ON CHOICE OF COURT AGREEMENTS

The States Parties to the present Convention,

Desiring to promote international trade and investment through enhanced judicial co-operation,

Believing that such co-operation can be enhanced by uniform rules on jurisdiction and on recognition and enforcement of foreign judgments in civil or commercial matters,

Believing that such enhanced co-operation requires in particular an international legal regime that provides certainty and ensures the effectiveness of exclusive choice of court agreements between parties to commercial transactions and that governs the recognition and enforcement of judgments resulting from proceedings based on such agreements,

Have resolved to conclude this Convention and have agreed upon the following provisions –

CHAPTER I – SCOPE AND DEFINITIONS

Article 1 Scope

1. This Convention shall apply in international cases to exclusive choice of court agreements concluded in civil or commercial matters.

2. For the purposes of Chapter II, a case is international unless the parties are resident in the same Contracting State and the relationship of the parties and all other elements relevant to the dispute, regardless of the location of the chosen court, are connected only with that State.

3. […]

FROM OUTCAST TO ACCEPTED PRACTICE

Until the second half of the twentieth century, courts in the United States generally did not look favorably on clauses in private contracts that might lead to dispute resolution in another forum. It was common doctrine that “agreements in advance of controversy whose object is to oust the jurisdiction of the courts are contrary to public policy and will not be enforced.” This doctrine stood on the dual rationale that parties could not privately agree to alter the jurisdiction of courts and that contractual stipulations to limit judicial jurisdiction were against public policy.

Focusing on the distinction between prorogated jurisdiction and derogated jurisdiction, courts traditionally looked more favorably on being the selected court than on being the rejected court. This view tended to suggest that private parties using choice of court agreements were granting or removing jurisdiction from specific courts. Such an analysis obviously conflicted with basic American concepts of judicial power. An alternative analysis suggested that “[t]he real issue…is not whether the parties can by agreement ‘confer’ or ‘oust’ jurisdiction, but whether the selected or ousted court will exercise its own jurisdiction in such a way as to give effect to the intention of the parties.”

THE BREMEN STANDARD

The idea that choice of court agreements do not affect the existence of jurisdiction but rather only the propriety of the exercise of that jurisdiction was further developed by the U.S. Supreme Court when it squarely addressed the matter in 1972 in M/S Bremen and Unterweser Reederei, GmbH v. Zapata Off-Shore Co.

INTRODUCTION

This chapter provides a brief introduction to the Convention. It is not meant to be a substitute for the more detailed analysis that follows, but rather an effort to provide in one place a basic overview of the Convention's purpose, scope of application, and basic rules, and to facilitate a general understanding of the Convention.

THE THREE BASIC RULES

The Hague Convention on Choice of Court Agreements provides rules giving effect to choice of court agreements and for recognizing and enforcing the resulting judgments. These objectives are accomplished in the Convention primarily through three basic rules found in Articles 5, 6, and 8.

ARTICLE 5: THE CHOSEN COURT SHALL HAVE JURISDICTION

Article 5(1) of the Convention provides the basic rule that “[t]he court or courts of a Contracting State designated in an exclusive choice of court agreement shall have jurisdiction to decide a dispute to which the agreement applies, unless the agreement is null and void under the law of that State.” In this rather simply stated provision, the Convention provides both the basic rule of jurisdiction applicable in the chosen court and the major general qualification to that rule. The rule itself is a reflection of respect for party autonomy and the desire to provide predictability in commercial and other relationships of a private nature. As a general proposition, if the parties in an exclusive choice of court agreement select a specific court located in a Contracting State for purposes of adjudicating their disputes, that court shall have jurisdiction.