[Hague-jur-commercial-law] Note of EU meeting Hague Convention 31.1.05

[Michelle Childs]

  EU Commission public Hearing of 31st January 2005 on Hague Convention.

 Format: first the questions the Commission asked then my notes are
underneath. Please note that these notes are not verbatim , nor have I
captured every comment just the main ones.
Michelle


 Question 1. The key provisions of the Convention (Articles 5, 7 and 9)
The balance between 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 the need to allow States to
pursue some aspects of their public policy and the safeguard of specific
values.


MC's notes:

France: Conditions and content of Agreement clause should be redrafted.
Exceptions in Art 7 go too far to have legal certainty. Judges should have
limited discretion, therefore circumstances when a judge can decline
jurisdiction should be limited. 7 (e) should be deleted.

Magistrates Assoc. Art 7: definition of public policy too wide. General
rule defining capacity should be included otherwise it will be defined
differently by different courts and therefore lose legal certainty. Art 7
(e) should be deleted. Art 5 .2: should be possibility for judge to refuse
jurisdiction on basis another court dealing with the matter.

University of Brussels: Art 7 (c) Exemptions for serious injustice and
public policy should be separated and defined separately. Exceptions on
public policy entail risk to freedom of parties to choose competent court.

Many comments expressed concern at confusion between law of State and law
of contract. Art 7 (a).

Commission: Art 7 (a) null and void under the law of the State.  Need to
discuss which court decides null & void. Two possibilities. 1) Law of
contract 2) law of chosen Court. If 2 ( law of chosen ct) it would include
application of private international law so if applying 2 would also apply
law of contract (1).
Conditions on validity of agreement should  be defined by the Convention-
at present are not.
Relationship between Art 5(2) and Art 7 : coherence should be assured
between them.


Question 2. Relationship with other international instruments (Article 23,
in particular para  2 and 6)
The balance between  the respect for existing international obligations
ensuing from bilateral and multilateral treaties and the freedom to  enter
into future obligations relating to specific matters and the interest to
make the application of the Convention as broad as possible. The relations
between the Convention and existing and future Community law.

MC's notes:-

Speaker not unidentified: Thought that purpose was that Convention did not
effect other international conventions to which parties are signatories.
In reality ( paras 4&5) the result is the opposite. This convention would
mean that subject to conditions in 4&5  being met any other international
obligation would be put aside.

France: Concerned that convention would ‘trump’ other community
instruments dealing with the same subject matter which have been tried and
tested and shown to work.  Drafting lacks clarity, it is not coherent. E.g
particular in para 3 what is meant by ‘what is affected’?

Italy: Similar concerns as France about compatibility with other community
instruments e.g Lugano and Brussels. Drafting is inadequate.

Swiss: Concern that Art 23 para 4 would conflict with Lugano Con. Support
France & Italy text unclear needs to be written more clearly and
succinctly.
Russia: Shares the conflict concerns. Suggested use Art 25 from ‘old’
Hague or delete  para 3 4 (e)

US: Proposals to change would mean that there would be no effective treaty
between those countries that have their won treaty rules. E.g If US party
enters into choice of forum agreement Hague has little effect. If there is
to be a convention then we would expect convention to apply. This point
goes to the heart of whether parties want a convention or not.
Italy: Convention’s credibility relies on Art 23.
Commission : Put in plea for existing text to remain as it had been the
subject of long negotiations.


 Question 3. Treatment of intellectual property rights  (Articles  2.2.k.,
6 and 10)
The extent of inclusion/ exclusion of IP right issues and the consequences
of exclusion of validity issues. The treatment of issues related to
infringement of IP rights.

MC's notes

 IFPA: Para 2.2 supports brackets in brackets ( in Comm draft). Art 6 has
drafting problem. Art 2.2k and Art 10. make distinction between general IP
rights and copyright and other design rights. The same language should
apply here. Art 10. concerned that it refers to Art2.2 k as think it means
that all of those things would be excluded.

France: Wants IP to remain exclusive jurisdiction of the Court where it
was granted. Art 2.2k does not seem to include matters raised as
incidental questions. This should also be excluded preserve national
sovereignty. Put forward 2 drafting amendments in submission. Validity if
either rose, as a major or incidental question should be refereed by the
Court to the Court of the Country where the rights were granted. Art 6
should make this mandatory. Also want to exclude disputes relating to
counterfeiting. Have concern about parties suing this a tool for time
wasting. Art 10 deals with some of these concerns.

MPA: Asked Commission if they could see other parties comments. (Comm.
said that it could not guarantee this as some comments private.) Rights
and scope: Convention has no value for right holders with cross border
interests unless IP is covered. Copyright should be included in the
section on scope of the convention.  Rights: natural persons and authors
should be included. Validity should be excluded. Stressed need for legal
certainty.

UK: Validity should be excluded. Questioned how important to exclude IP
when parties had chosen to litigate. Only has effect inter parties not in
rem ( i.e doesn’t set national precedent).

Comm.: asked whether more things than  validity should be excluded.

Cptech: Raised the two drafting suggestions from cptech brief. One in
relation to anti competitive behaviour 2) on contractual restrictions on
parallel imports.

Swiss: Validity of rights can only be decided by the registered state. Not
controversial. But a distinction can be made between licence agreements
and infringement claims where you could have an incidental examination.
Not clear when Court takes a preliminary decision in an incidental way why
sovereignty can only be claimed. Its excessive to exclude this section
from the Convention.

China: Validity  should be excluded.  Its crucial that sovereign sates
retain sovereignty in relation to registration so IP. Parties autonomy in
contracts not supposed to apply to this issue.

Russia:  Validity  should be excluded. Disputes relating to registration
of IP rights should be excluded from the scope of the Convention as this
is the  sovereign role of Govts.

 Question 4. Damages (Article 15)
Balance between the reasonable expectations of the parties to the choice
of court agreement in having the resulting judgment recognised and
enforced and the public policy interests of the State of recognition.
Balance between the practical complexities of procedure introduced by
Article 15 and the consequences of its suppression (including the danger
of using the “public policy” clause to refuse enforcement of the whole
judgement).

MC's notes:

Comment: These discussions dominated by Mr Perch (sp?) a lawyer from
Slaughter & May (a big City of London law firm)

Perch:  Text lifted from previous negs. On jurisdictions- probably
unworkable in the UK. In relation to punitive damages differences between
common law and civil jurisdictions. In the former generally available in
the latter not. The problem is not the principle it’s the amount of the
awards that are made in the US. Need some ways to address huge awards. In
Us and UK similar principles when awarding damages but the quantum (
amount) is different. Therefore need to change 15.1 to include language
from Comm. Report that  makes it clear that it covers quantum as well.
Ideally remove from Convention so that it does not apply to punitive or
multiple awards then leave that to be dealt with by national law.
15.2 : Understands principle but concerned about how workable it would be
in practice.
15.3: This was put in by the US . Doesn’t see how a Court can decide what
amount is down to costs. How can a court reclassify aspects of punitive
damages as costs? 15.3 should be deleted. US can amend its rules of civil
procedure for international cases so judge can certify what awards are
subject to costs. ( much laughter from audience)

France: Accept the problem but current wording does at least give parties
a degree of predictability. Could add a condition talking about excessive
awards.

UK : Think Art 15  valuable in principle. Accept complex, but don’t agree
it should be deleted. Use public policy exception instead. Major concern
that insurance not covered.

German Insurance Assoc.  Text going in right direction but need a barrier
to stop multiple punitive damages awards. Should exclude multiply punitive
damages larger than permissible in Europe.

Eurochambres (Biz Assoc) Need to restrict enforcement of high damages.
Need to be clear who would have the burden of proof.

Lloyds of London.  Long explanation of fact EU and non EU reinsurers face
discriminatory legal regime in US where US insurances are allowed to take
account of reinsurance by non US insurers but  non US reinsurances can’t
use rights in US Cts.  Art 2&15 should be clarified so reinsurers get
right to enforce in US.  Art 2: words added to make clear insurance and
reinsurance not excluded.

US. Wanted to explain how Art 15 looks to those in US. At present
judgements from US are subject to laws of domestic states in the EU. If
there are so many potential problems with enforcing judgements in the UK
why aren’t we seeing them?  Not many cases where it happens. Other EU
jurisdictions have been able to use public policy exemptions – in
principle public policy exemptions should be able to deal with excessive
awards. But 15.2  gives new tools to judges to re open settlements and
re-examine compensatory damages of a contract. Uncertain. Makes convention
unattractive. By proposing a new article to deal with excessive awards
would create such uncertainty that it would not be attractive at all to US
lawyers or policymakers.

Italy :  public policy exemption deals with this problem, better than new
article.

 Question 5. Non-exclusive choice of court agreements
The pros and cons of possible extension of the recognition of judgments
aspect of the Convention to non-exclusive and/or asymmetric choice of
court agreements.

MC's notes:

Speaker unidentified: If an agreement is non exclusive but upheld by the
parties ( so that jurisdiction is not a question) why shouldn’t it be
recognised?

Perch:  Important that it does cover asymmetric and non exclusive
agreements as most trade agreements contain these terms esp. in money markets

Comm.: To extent concerns exist about parallel proceedings can deal with
this pint by stating not dealing with parallel proceedings.

 UK: Support Perch and Comm proposals.

Question 6. Other issues
    Other aspects of scope and exclusions, such as:
-  the  time factor in Article 1 (and 19)-

MC's note : not dealt with
-	contract restrictions on parallel imports,
MC's note: Cptech dealt with above.
-
the definition of consumers,

MC's notes:
 BEUC made an intervention ( also written submission based on it) .
Definition too restrictive in current draft. Would have the implication
that that certain categories of consumer who benefit from special
protection under EU Directives would fall under scope of convention. Want
wider definition. Based on EU directives on Consumer protection- meaning a
natural person who acts outside his/her trade or profession. Also supports
an exclusion of contracts concluded by legal persons or
professionals that concern needs not directly connected with their
activities. This would allow for non-profit orgs, schools or libraries to
be protected against unfair or unjust choice of court clauses.
-
Comm.: Not their intention to restrict- just copied wording from Vienna
Convention. Was there really a difference between the two defs and what
would they be? Could BEUC give an example? Comm. Is clearly trying to
exclude consumers from draft so imp \to get right.

BEUC: Offered to return to Comm. with examples.

Imbalance of legal systems.

MC's notes:

UK on behalf of Lloyds(!) raised again the point that Art 2 should not
exclude insurance contracts just because deal with excluded matter.

 New Question: Art 11. Comm. raised its own question: How should this be
worded?

MC's notes:

France: want worded as general as possible. Suggested ‘no ruling in
contravention of Art 7 is enforceable in any Member State.

Italy Justice Ministry: French proposal too strong. Parties can change
their minds they want flexibility.

UK: In general UK in favour of Art 11 and applying to judgements from non
contracting states. Support second option in Comm. report. In relation to
Italian comment if both parties change there mind then OK but has to be
both.

Next Steps- Comm. wants any practical drafting suggestions, will be
drafting over next few months. Confident that there will be progress in
June.


END.




-- 
Michelle Childs -Head of European Affairs
Consumer Project on Technology in London
24, Highbury Crescent, London, N5 1RX,UK.
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http://www.cptech.org

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