The Hague Convention

The Hague Convention on Exclusive Choice of Court Agreements (formerly the Draft Convention on Jurisdiction and aEnforcement of Judgments in Civil and Commercial Cases)


What is the Hague Convention?

The Hague Conference on Private International Law is an intergovernmental organization, with 64 Member countries, which was established over a hundred years ago to negotiate and draft multilateral treaties or Conventions in the different fields of private international law. One of the conventions (agreements) under negotiation for a decade, which has just been concluded in June 2005, is the "Hague Convention on Choice of Court Agreements." This convention will create jurisdictional rules governing international lawsuits and provide for recognition and enforcement of judgments by the courts of Member States. Member States, of which the U.S. is one, that ratify the Convention, will be required to recognize and enforce judgments which come within its scope. The library community has been following the development of this convention for several years because of the importance of jurisdictional matters, particularly those concerning contracts and intellectual property rights.

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What is the background of the Convention?

Discussions on a draft “Convention on Jurisdiction and Enforcement of Judgments in Civil and Commercial Cases” began in 1992 and several meetings were held in the years since then to consider varying drafts. Finally, in 2002, lead delegates from the Hague Conference member countries agreed over the next year to draft a scaled-down convention based on less controversial "core" provisions. In March 2003 a small Working Group produced a new, narrower draft treaty for consideration by the member countries.

In the summer of 2003 the Hague Conference on Private International Law announced that the member countries had agreed to go forward with trying to draft a convention that would apply only to cases in which business and commercial parties have chosen a court (or "forum") in their contract (so called "B2B contracts"). The draft convention would make such "choice of court" terms in contracts (including those governing copyrighted materials, such as software) enforceable if the parties resort to the courts to settle a legal dispute. The convention would also ensure that judgments rendered by the courts designated in such agreements are enforced by other courts. (For example, the assets of a losing party may be in a country other than the one where the judgment was rendered, making it necessary for the winning party to have the judgment, awarding money to the winner, enforced subsequently in another court.)

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Why are libraries concerned about the Convention?

Although by 2003 the draft convention had been scaled down considerably, many groups, including libraries and the business community, continue to be concerned about terms in non-negotiated contracts and licenses, which allow the licensor to designate in advance which court will hear the parties' disputes. For example, library groups wrote a letter to the head of the U.S. Delegation to the Hague Conference in June 2003, setting out library concerns with the draft convention on choice of court agreements. (See letter of June 13, 2003 in related content below) The library letter pointed out that terms in non-negotiated contracts and licenses, which allow the licensor to designate in advance which court will hear the parties' disputes, remain a significant and controversial issue for many groups, including libraries and the business community.

Here is an example of how a dispute might come about.
A U.S. library in a university clicks "I agree" in the process of licensing a database through the Internet. We would consider this "click-on" agreement to be a "non-negotiated" license because there is really no opportunity to change or affect the terms presented on the Web site of the database owner. The license agreement (contract) requires that any litigation about the license/contract must be brought in or defended in a particular court distantly located, for example, in Hong Kong. There is a dispute over the license/contract. For example, the licensor may take issue with the library's interpretation of what uses it and its patrons may make in the way of copying, printing, extraction of data, linking, electronic reserves, preservation, interlibrary loan, etc., just to name some common uses. Defending a suit in a distant location (not to mention the difficulty of dealing with a law that may be unfavorable to the licensee-library, which is yet another issue) can work extreme hardship to a non-profit institution. When we agree to such a term as part of a negotiation, that is one thing. Where there is no opportunity to negotiate the terms of the "deal," however, we do not think that is the correct outcome.

The convention does not change the underlying substantive law of contracts of the Member Countries. However, some critics are concerned that contracts falling under the terms of the treaty (including non-negotiated contracts) will be more easily enforceable.

NOTE:
Although some language in the final Convention (see below) is helpful in addressing the concerns about non-negotiated contracts, these issues and others remain. For further background on the controversy surrounding non-negotiated "shrink-wrap" or "click-wrap" contracts, turn to our UCITA pages. One proposed provision in the amendments to Article 1 of the Uniform Commercial Code, which began circulating in state legislatures in 2002, reflects the same kind of thinking about choice of forum and choice of law clauses seen in the original drafting of UCITA.

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What is the status of the Convention?

In 2001 ALA requested the Department of State to include a library representative on the U.S. Delegation to The Hague. In 2003, the State Department agreed to have an ALA representative participate as a Private Sector Advisor on the U.S. Delegation at a special meeting in The Hague, December 1-9, 2003; that meeting resulted in a new draft convention on choice of court agreements. Another special meeting was held in The Hague in April 2004, producing yet another draft of the convention. A Diplomatic Conference to approve the final treaty was convened in June 2005.

To address the concern that the Convention would make choice of court terms in so-called “click-wrap” contracts more easily enforceable, a number of groups - prior to the Diplomatic Conference - had pressed for an exclusion from the scope of the convention. That is, they asked for an express provision that non-negotiated contracts, such as shrink-wrap and click-on agreements, would not be covered by the convention. Ultimately, however, the pressure from software and copyright industries in the US and abroad to include non-negotiated contracts was more effective. As concluded in a diplomatic conference on June 30, 2005, the convention contains no such express exclusion. (The convention, which now must be ratified by Member Countries of The Hague Conference, is available on the Hague Conference Web site.)

Thus, any relief for US businesses and institutions from the enforcement of choice of court terms in non-negotiated agreements of an international nature will have to come from other provisions of the convention itself (the “escape clauses” are quite limited, see below), from implementing legislation, or from opposition to ratification of the convention.

The Convention on Choice of Courts Agreements is available on the Hague Conference web page.

Here are the highlights of the Convention that are most pertinent to libraries.

The convention is intended to provide certainty that courts have jurisdiction to hear disputes between business and commercial parties who have entered into a contract ("B2B contracts") and that the courts of other countries will recognize and enforce the judgments issued by those courts.

  • The convention applies to commercial contracts that specify that if there is a dispute between the parties to the contract, the proceedings will be heard and decided by a particular court (or the courts of one particular country). Such clauses or agreements in contracts are called "exclusive choice of court" agreements.
  • Commercial contracts for copyrighted materials are covered by the convention. The convention does not apply to proceedings that mainly concern a dozen other specified matters including the validity of other intellectual property rights.
  • An earlier draft of the convention contained an Article 3 ("Formal Validity") that seemed to suggest that any choice of court clause meeting the requirements set out in the article would be considered a valid contract. (See libraries' letter of June 13, 2003 in Related Files below) That article has been eliminated in an attempt to remove that confusion. Whether an underlying contract is substantively valid - for example, whether one party has assented to certain terms - is left up to the law of the court hearing the dispute. The convention requires only that the choice of court agreement be in writing (including electronic).
  • The general rule, with exceptions, is that the court chosen in the parties' agreement should hear the dispute brought before it.
  • The general rule is that if the dispute is brought before another court (other than the one designated in the agreement), that court will decline to hear the case. Again, there are exceptions, including that "the agreement is null and void under the law of the State of the chosen court" and that "giving effect to the agreement would lead to a manifest injustice or would be manifestly contrary to the public policy of the State of the court seised." These types of escape clauses are important for parties who want to challenge the enforcement of a choice of court clause. However, the language sets a high bar and it is unclear whether these provisions will be available except in extraordinary cases. (See libraries’ letters of March 2004 and April 2005 in Related Files below.)
  • The general rule - with some exceptions - is that once the court designated in the exclusive choice of court agreement has issued a judgment, that judgment will be recognized or enforced by other courts of the Hague Member Countries.

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Who else has been involved in these meetings on the draft?

The other stakeholders that have been participating in these meetings over the past few years are the technology industry, including internet service providers (ISPs); the copyright content industry; and consumer protection organizations. There have been many issues raised on behalf of consumer protection groups, which have studied the draft Convention and been very active in addressing these issues. See, for example, http://www.cptech.org/ecom/jurisdiction/hague.html. ISPs have expressed concern that the treaty could accelerate a trend of foreign countries claiming jurisdiction over U.S. web sites, such as in the recent controversy involving Yahoo! In that case, a French court ordered Yahoo! to prevent web users in France from accessing a site containing racist materials. Under the draft treaty, a U.S. court could refuse to enforce the French judgment only under very limited conditions, for example, if the American court found that enforcement would be “manifestly incompatible” with the public policy of the U.S. (such as embodied in our First Amendment). Other countries that were signatories of the treaty, however, might well enforce the French court judgment.

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