Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters

On 2 July 2019, the delegates of China together with delegates from 80 other countries signed the Final Act of the The Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (the “Convention”).The Convention aims at making it easier to enforce civil and commercial court judgments across jurisdictions by creating a single global framework and thus providing greater predictability and certainty in relation to the global circulation of foreign judgments.

I. Highlights of the Convention

a. Scope of Application
The Convention only encompasses recognition and enforcement of judgments with respect to civil and commercial matters. It explicitly excludes its application to judgments rendered in relation to revenue, custom or administrative matters (Article 1).

In addition, the Convention provides an exhaustive list in Article 2 setting out 17 types of matters that are out of its reach, which includes the status and legal capacity of natural persons, maintenance obligations, wills and succession, insolvency, composition, resolutions of financial institutions, the carriage of passengers and goods, privacy, intellectual property, anti-trust (competition) matters, etc.

Besides, please note that the convention only applies to decisions on the merits, including judicial settlements and determinations of costs. Interim measures of protection are however not covered by the Convention.

b. No review of the merits
Article 4 of the Convention provides that there shall be no review on the merits of the judgment in the requested State. This is based on the pro-enforcement bias. The article can be regarded as a good signal and a promising development to promote the finality and enforceability of foreign judgments.

c. Bases for recognition and enforcement
In order for the judgements being eligible for the recognition and enforcement under the Convention, a minimum link shall be established between the party against whom enforcement is sought, and the state of origin. The establishment of the link is broadly prescribed, and can be determined by:

• the habitual residence, principal place of business or branch of the person subject to enforcement, the place of performance or immovable property concerned situated at the state of origin;
• consent of the person subject to enforcement to the jurisdiction of the court of the state of the origin; or
• the person subject to enforcement being the claimant or counterclaimant.

d. Refusal of recognition and enforcement
Recognition and enforcement of an eligible judgment may be refused by the court of the requested state on the following grounds: (a) illegal notification, which might unreasonably decline the defendant’s rights to arrange for its defence; (b) the judgment was obtained by fraud; (c) the recognition and enforcement is incompatible with the public policy of the requested state; (d) the court of origin had no jurisdiction according an agreement or a designation in a trust instrument; (e) the judgment is inconsistent with a judgment given by a court of the requested state or (f) an earlier judgement given by another state.
 

II. Outlook
Although the Convention has been signed by all delegates of the member states, its binding effect is still pending on the ratification, acceptance and approval procedures of most of the member states, including China. In the current state,  the recognition and enforcement of a judgment in a foreign country still highly relies on the reciprocity or bilateral treaty (if any) between the concerned two countries. It is undoubted that the Convention, once taking effect in most of the member states, will change the landscape of global circulation of court judgments, and will facilitate the effectiveness and predictability on the global enforcement of court judgments. However, it remains to be seen whether it will become a game changer in international dispute resolutions, since arbitration is still a preferred option in the foreseeable future for the resolutions of international claims in reliance of the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which currently counts 160 member states globally.