PURPOSE: to approve, on behalf of the European Union,
of the Hague Convention of 30 June 2005 on Choice of Court
Agreements.
PROPOSED ACT: Council Decision.
ROLE OF THE EUROPEAN PARLIAMENT: Council may adopt the
act only if Parliament has given its consent to the
act.
BACKGROUND: the Convention on Choice of Court
Agreements concluded on 30 June 2005 under the auspices of the
Hague Conference on Private International Law makes a valuable
contribution to promoting party autonomy in international
commercial transactions and increasing the predictability of
judicial solutions in such transactions. In particular, the
Convention ensures the necessary legal certainty for the parties
that their choice of court agreement is respected and that a
judgment given by the chosen court is eligible for recognition and
enforcement in cross-border situations.
Article 29 of the Convention allows Regional Economic
Organisations such us the European Union to sign, accept, approve
or accede to the Convention.
The Convention affects Union secondary legislation on
jurisdiction based on choice by the parties and the recognition and
enforcement of the resulting judgments, in particular Council Regulation (EC) 44/2001 on
jurisdiction and the recognition and enforcement of judgments in
civil and commercial matters (the Brussels I Regulation) (to be
replaced by Regulation (EU) No 1215/2012
as of 10 January 2015), it is in the interests of the European
Union to approve the Hague Convention so that it enters into force
on the same date of the entry into application of Regulation
(EU) No 1215/2012.
Moreover, the Union, should, when approving the
Convention, make the declaration allowed under Article 21 excluding
from the scope of the Convention insurance contracts in
general, subject to defined exceptions in order to preserve the
protective jurisdictional rules available to the policyholder, the
insured party or a beneficiary in insurance contracts under Section
3 of Regulation (EC) 44/2001. The exclusion should be limited to
whatever is necessary to protect the interests of the weaker
parties in insurance contracts.
The Convention was signed by the Union on 1 April 2009
on the basis of the Council Decision 2009/397/EC. It is now
necessary to approve the Convention on behalf of the EU.
LEGAL BASIS: Article 81(2), in conjunction with point
(a) of the first subparagraph of Article 218(6) of the Treaty on
the Functioning of the European Union (TFEU).
CONTENT: under this proposal, the Council is requested
to adopt a decision to approve, on behalf of the EU, the 2005 Hague
Convention on Choice of Court Agreements.
Having the EU approve the Convention would reduce
legal uncertainty for EU companies trading outside the EU by
ensuring that choice of court agreements included in their
contracts are respected and that judgments issued by the courts
designated in such agreements would be eligible for recognition and
enforcement in the other Contracting Parties to the
Convention.
Overall, approval of the Convention by the EU would
complement the realisation of the aims underlying the EU rules on
the prorogation of jurisdiction, by creating a harmonised set of
rules within the EU in respect of third states which will become
Contracting Parties to the Convention.
The Hague Convention of 30 June 2005 on Choice of
Court Agreements: the Convention on
Choice of Court Agreements is designed to offer greater legal
certainty and predictability for parties involved in
business-to-business agreements and international litigation by
creating an optional worldwide judicial dispute resolution
mechanism alternative to the existing arbitration
system.
In particular, the objective of the Convention is to
promote international trade and investment through enhanced
judicial cooperation by introducing uniform rules on jurisdiction
based on exclusive choice of court agreements and on the
recognition and enforcement of judgments given by the chosen courts
in its Contracting Parties.
The Convention seeks to achieve a balance
between:
(i) the need to guarantee to the parties that only the
courts chosen by them will hear the case and that the resulting
judgment will be recognised and enforced abroad, and
(ii) the need to allow States to pursue some aspects
of their public policy, related in particular to the protection of
weaker parties, protection against serious unfairness in particular
situations and guaranteed respect for some grounds of exclusive
jurisdiction of States.
How the Convention relates to the Brussels I
Regulation: the Convention affects
the application of the Brussels I Regulation if at least one of the
parties is resident in a Contracting State to the Convention.
The Convention will prevail over the jurisdiction rules of the
Regulation except if both parties are EU residents or come from
third states, not Contracting Parties to the Convention. The
Convention will give EU business the necessary legal certainty that
their choice of court agreements in
favour of a court outside the EU are respected in the EU, and that
agreements in favour of a court in the EU are respected in third
States. It will also ensure that EU businesses can be confident
that a judgment given by the chosen court in the EU is eligible
for recognition and enforcement in third states, Contracting
Parties to the Convention, and vice versa.
Declaration on insurance contracts: the Brussels I Regulation (Section 3) provides for
special protective jurisdiction in matters of insurance aimed at
protecting the weaker party (the policyholder, the insured party or
a beneficiary) and the economic interests of the general public of
the place where the weaker party is located. The insured party, as
plaintiff, therefore has a choice of suing the insurer at several
places, including the place where the insured party is domiciled;
the insurer, as plaintiff, can sue the insured party in principle
only where the latter is domiciled. These protective jurisdiction
rules are based on the premise that the insured party is always the
weaker party, even if he acts as a commercial operator in B2B
relations. There is no change to this
presumption in the Brussels I Regulation (recast). For this reason,
the possibility of the parties concluding the choice of court
agreement has been limited (Article 13 of the Regulation). The
Convention on its part applies to insurance matters without
limiting party autonomy to conclude choice of court agreements. The
only substantive limitation results from Article 2(1)(a) of the
Convention which excludes insurance contracts entered into by
private persons as consumers. This is partially contrary to the
regime established in the Brussels I Regulation insofar as, for
instance, the Convention would apply to insurance contracts
concluded by SMEs. Once the Convention is approved by the EU,
certain insurance contracts which now fall under the Brussels I
Regulation, e.g. contracts between an EU policyholder and the EU
branch of an insurer with headquarters outside the EU (Article 9(2)
of the Regulation) would fall within the scope of the Convention
(Article 26(6), in conjunction with Article 4(2) of the
Convention). Therefore, if the Convention were to be concluded
without excluding insurance contracts, there would be a lack of
parallelism with the protective policy established in the Brussels
I Regulation which allows the insured party to sue an EU insurer
(or a EU branch of third State insurer) in his own place of
domicile irrespective of any other jurisdiction available under a
choice of court agreement.
Other technical provisions have been included for the
EU to exclude certain types of insurance matters falling within the
scope of the Convention, without laying down additional conditions.
The carve-out is as small as is needed to
achieve the goal of protecting the interests of weaker parties in
insurance contracts as reflected in the protective jurisdiction
rules of the Brussels I Regulation.