[Random-bits] USG responses to questions on Hague Treaty

[James Love]

October 26, 2000

DRAFT HAGUE CONVENTION ON JURISDICTION AND THE RECOGNITION AND
ENFORCEMENT OF FOREIGN CIVIL JUDGMENTS
BRIEF ANSWERS TO QUESTIONS POSED BY CONSUMER GROUPS

Jeffrey D. Kovar
Assistant Legal Adviser for Private International Law
U.S. Department of State

GENERAL NOTE

        In answering the following questions, reference will be made to
the preliminary draft of the Hague Convention, which was adopted by the
Special Commission of the Hague Conference in October 1999
(www.hcch.net/e/conventions/draft36e.html).  It is important to realize,
however, that this text is not final and will be subject to intensive
negotiations over the next 12 - 18 months.  The United States and some
other delegations have stated that the preliminary draft Convention is
not a suitable basis for final negotiations without significant
additional work.  As a result, governments will be engaging in informal
negotiations in a variety of settings over the next several months, then
will meet in the Hague in June for the first part of a Diplomatic
Conference to prepare a final convention.  The second part of the
Diplomatic Conference has not yet been scheduled, but could be as early
as late 2001 or early 2002 if sufficient progress is made.


QUESTIONS

	1. How will the Hague Convention on Jurisdiction affect labor
unions in the U.S. that engage in boycotts or corporate campaigns
against union busting firms?  For example, a campaign that urges global
consumer boycotts, using the Internet to spread the message.  Could the
anti-union employer sue a U.S. labor union in a foreign country, get a
judgment abroad, and collect the judgment in the US, wherethe US labor
union has assets?
        
        ANSWER:
        
        It is not clear that the draft Hague Convention would affect the
litigation status quo involving labor unions in the United States.  
Article 8 provides special jurisdictional rules in cases involving
individual contracts of employment, but does not address collective
bargaining agreements.  It would be very helpful, however, if labor law
experts could focus on the jurisdictional provisions of the draft
Convention and flag any special concerns that might arise in
international cases involving unions.

        As for the question whether U.S. labor unions could be sued
abroad in tort for boycotts or alleged defamatory statements and have
the resulting judgments enforced against them in the U.S., in principle
parties could attempt that now since U.S. courts are very receptive to
the enforcement of foreign judgments.  Nevertheless, it would seem that
an argument could be made that such judgments should not be enforced on
the ground that they are contrary to public policy in this country.  
Similarly, under the draft Convention, Article 28(f) contains a public
policy exception to enforcement that could be used to deny enforcement
under the Convention.

        2.  This is a question about the Hague treaty and libel and
slander claims, based upon Internet communication.
        
                a.  Could a corporation sue me in England, under the
more restrictive laws in England regarding libel and slander, get a
judgment in the UK, and collect it from me here?
                
ANSWER

        Currently, corporations can sue American defendants under
English defamation law, receive a judgment, and attempt to enforce that
judgment in the United States.  However, U.S. courts have been generally
reluctant to enforce English defamation judgments because the underlying
English law is inconsistent with fundamental U.S. free speech traditions
protected by the First Amendment.  This U.S. case law would most likely
not be affected by the Convention, which, as indicated above, contains
an exception to the general rule of enforcement where necessary for
public policy reasons.
                
                b.  If I was sued for libel or slander in the UK, for
something I published on a U.S. web site, would I be protected by the
1st amendment in the UK?  Would I rely upon a UK judge to interpret my
first amendment protections?
                
ANSWER

        Nothing in the Convention addresses questions of choice of law.  
It addresses only choice of jurisdiction (the courts of which country
has competence to hear the case -- not the law it would apply to the
case).  Thus, UK judges would no more be obligated by the Convention to
apply or interpret U.S. First Amendment protections than they are today.
                
        3.  Regarding the Hague treaty and copyright and fair use on the
Internet, what national laws would apply if I download an article, data,
music or software from a European web site, to my U.S. based computer,
and make an unauthorized use, for teaching, reverse engineering,
commentary, parody or some other use that would be fair use in the U.S.,
but possibly not fair use in Europe.
        
        ANSWER
        
        The Hague Convention, as noted above, would not affect how
choice of law is decided under national law.  Thus, current choice of
law rules that address copyright and fair use would apply as they do
now.

                a.  Could I be sued in Europe for violating the European
copyright laws?  Would a judgment be collected against me in the USA?
                
ANSWER

        Yes, you may in principle be sued (as you may be today), but the
Convention will provide some additional protections for you.  To the
extent you might be subject to the required grounds of jurisdiction in
Articles 3 - 16, you are probably subject to suit today.  Moreover,
there are some exorbitant grounds of jurisdiction -- such as
jurisdiction in France based on the French nationality of the plaintiff
-- that the draft Convention would prohibit in Article 18.  Keep in mind
as well that enforcement is now generally available in the U.S. for
foreign judgments.  Article 28 has a substantial list of defenses to
enforcement that are consistent with the practice of U.S. courts.
                
                b.  Could U.S. firms simply publish virtually from
Europe to have the benefits of tougher copyright protections in Europe?
                
ANSWER

        To the extent that U.S. firms believe they would gain litigation
benefits from publishing virtually from Europe, they could do so now.  
However, normally liability is adjudged based on where the infringement
occurred rather than the publication.  It is not clear what extra
benefit the Convention would provide here.

        4.  This is a question that concerns the relationship between
the Hague Treaty and contracts of adhesion.  Our interests include not
only contracts between business and consumers, but also between business
and libraries, or business and small business.
        
                a.  Has the USG effectively blocked the current draft
language in Article 7, on the grounds that consumers should not have a
right to bring an action in the courts where they are resident?
                
ANSWER

        No.  The U.S. Delegation to the Hague Convention negotiations
opposed the language in Article 7 because it would create an absolute
rule against choice of forum clauses in consumer contracts.  That is not
consistent with U.S. law, where such clauses may be enforced if they are
not unjust and unreasonable.  We would expect vigorous opposition to the
Convention in the U.S. if we were to accept an outright prohibition on
choice of forum clauses.  We will continue to explore how best to
reconcile the competing interests here for purposes of the convention.
                
                b.  If the USG has blocked approval of Article 7, what
is the USG in favor of?
                
ANSWER

        The U.S. did not block Article 7, which was included by majority
vote in the current draft.  As noted above, the U.S. is continuing to
explore how best to reconcile the competing interests here for purposes
of the convention.
        
                c.  Is the USG in favor of or opposed to having
jurisdiction of court or law determined by contract between the buyer
and seller.
                
ANSWER

        The U.S. has expressed certain specific concerns about the
unqualified use of choice of forum clauses in consumer contracts
concluded over the Internet.  If used inappropriately, these clauses
have the potential to hinder consumer confidence in e-commerce by: (1)
encouraging a race to the bottom, whereby companies choose jurisdiction
and laws with the least protection for consumers; (2) frustrating the
ability of law enforcement to protect its own citizens; (3) impeding
informed decision-making by consumers; and (4) depriving consumers of
meaningful access to judicial recourse.  On the other hand, in many
cases, it may be appropriate and beneficial to the growth of e-commerce
to allow parties (including consumers) to agree to valid and binding
choice of forum clauses.  For these and other reasons, we continue to
explore how best to reconcile the competing interests here for purposes
of the convention.
        
                d.  How will this work with contracts of adhesion?
                
ANSWER

        If a court finds that a choice of forum clause amounts to a
contract of adhesion it will generally not be enforceable.  The U.S.
would like to see such practice respected by the Convention.
                
                f.  What is the relationship between the various
UNCITRAL model contracts on ecommerce and UCITA and the Hague
Convention?
                
ANSWER

        Article 4(2)(b) (Choice of Court) reflects the modern standard
incorporated in the UNCITRAL Model Law on Electronic Commerce for
determining if an electronic transmission should constitute a writing.  
The rule in the Uniform Computer Information Technology Act (UCITA) with
regard to choice of forum is that parties in their agreement may choose
an exclusive judicial forum unless the choice is unreasonable and
unjust.  Otherwise there is no relationship between the Hague
Convention, which deals exclusively with jurisdiction and enforcement of
judgments, the UNCITRAL model law on electronic commerce, the draft
UNCITRAL model law on electronic signatures, and UCITA.

                
                g.  If a contract involves a service or product provided
over the Internet, does the supplier of the service or product have a
right to sue a consumer in the country where the product or service is
located?  Is this determined by the virtual presence on the web, or some
other standard for location?
                
ANSWER

        A provider of goods or services over the Internet can sue the
consumer where authorized by local law.  The draft convention would
require in Article 7(2) that the seller may only sue the consumer in the
place of the consumer's habitual residence, but U.S. law is not
necessarily so restricted.  We will continue to explore ways to
reconcile the competing interests here for purposes of this convention.

                h.  What if you cannot afford to defend yourself in a
foreign country.  Are you going to have to default the case?  Will the
judgment be automatically valid in the USA?
                
ANSWER

        Default judgments are enforceable under the Convention, just as
they are today under U.S. law.  Nevertheless, courts generally look more
closely at default judgments to ensure defendants were treated fairly.  
Similarly, under Article 27(2) of the draft Convention, when a court is
asked to enforce a foreign default judgment it is not bound by the
findings of fact with respect to jurisdiction in the judgment court.  
Thus, the defendant in a default action under the Convention could
litigate again the factual basis on which the original court found
jurisdiction.
                
                i.  What if one country has restrictions on contracts
ofadhesion, but another does not?  How are these differences resolved?
                
ANSWER

        In the current draft they are resolved in favor of never
enforcing choice of forum clauses in the business to consumer context.  
We will continue to explore how best to reconcile the competing
interests here for purposes of the convention.