The 2007 Lugano Convention vs. the 2005 Hague Convention

The 2007 Lugano Convention vs. the 2005 Hague Convention Presented by: Professor Yvonne Baatz Date: 24th June 2020 The 2007 Lugano Convention - The 2007 Lugano Convention continues to apply to the UK during the transition period after the withdrawal of the UK from the EU as retained legislation until 11pm on 31 December 2020 (see the European Union (Withdrawal Agreement) Act 2020 which amends the European Union (Withdrawal) Act 2018). - On 8 April 2020 the UK deposited its application to accede to the 2007 Lugano Convention in its own right at the end of the transition period - Iceland, Norway and Switzerland had previously stated that they will support a request for accession from the UK. The consent of the EU and Denmark will be required. accessed - The Private International Law (Implementation of Agreements) Bill was introduced in Parliament on 27 February 2020. The Bill enables the UK to implement international agreements in Private International Law in domestic law in future via secondary legislation including the 2007 Lugano Convention. - Under the predecessors to the Recast Regulation and the 2007 Lugano Convention there is no exception to the Lis pendens provision where the court second seized is the chosen court. That court must stay its proceedings until the court first seized has established whether it has jurisdiction. • Case C-116/02 Erich Gasser GmbH v MISAT SRL (Article 17 of the EC Jurisdiction Convention) • Mastermelt Ltd v Siegfried Evionnaz SA [2020] EWHC 927 (Article 23 of the Revised Lugano Convention). The English court was first seized and the Swiss court was second seized as a result of an alleged exclusive Swiss court jurisdiction clause. Waksman J rejected an argument that Article 27 of the Revised Lugano Convention must now be read in the light of and to the same effect as Article 31(2) of the Recast Regulation. As he held that there was a good arguable case that there was an exclusive Swiss jurisdiction agreement, he stayed the English proceedings. The 2005 Hague Convention on Choice of Court Agreements - So far the Convention is only in force in thirty one States, twenty seven of those the Member States of the European Union. It continues to apply to the UK during the transition period after the withdrawal of the UK from the EU as retained legislation until 11pm on 31 December 2020 (see the European Union (Withdrawal Agreement) Act 2020 which amends the European Union (Withdrawal) Act 2018). - The Convention entered into force on 1 October 2015 in Mexico and the European Union, thus binding twenty seven of the EU Member States but not Denmark; on 1 October 2016 in Singapore; on 1 August 2018 in Montenegro; and on 1 September 2018 in Denmark. China signed the Convention on 12 September 2017 but has not yet ratified it. - The UK intends to accede to the convention in its own right. It has notified the Ministry of Foreign Affairs of the Kingdom of the Netherlands the Hague that "The United Kingdom attaches importance to the seamless continuity of the application of the [convention] to the United Kingdom. The United Kingdom therefore intends to deposit a new instrument of accession at the appropriate time prior to the termination of the transition period". The Civil Jurisdiction and Judgments (Hague Convention on Choice of Court Agreements 2005) (EU Exit) Regulations 2018/1124 as amended by the Private International Law (Implementation of Agreements) Bill, are not yet in force. - Contrast the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 ("the New York Convention") which has been ratified by about 160 States including China and the UK. Party Autonomy Is At The Heart Of The 2005 Hague Convention - Party autonomy is at the heart of the 2005 Hague Convention, as it is in the New York Convention, and results in three basic principles: • If parties to a contract choose an exclusive court jurisdiction agreement that choice shall be given effect to unless the agreement is null and void under the law of that State - Choice of Court Convention, Article 5(1); • no other court should take jurisdiction - Choice of Court Convention, Article 6; and • Any court judgment resulting from such choice should be recognized and enforced - Choice of Court Convention, Article 8. • Each of these principles is subject to exceptions. Scope of the 2005 Hague Convention - The 2005 Hague Convention does not apply to some matters in Article 2(2) including • f) the carriage of passengers and goods; • g) marine pollution, limitation of liability for maritime claims, general average, and emergency towage and salvage; the carriage of goods • It does not therefore apply to a bill of lading or a voyage charterparty, but probably will apply to a time charterparty - The Convention does, however, apply to other maritime contracts such as • Ship finance contracts, • Ship mortgages and liens, • Ship building contracts, • Ship sale and purchase contracts, • Time charterparties, and • Contracts of marine insurance and reinsurance that relate to maritime matters, including cargo insurance (Article 17). Application of the 2005 Hague Convention to asymmetric jurisdiction agreements - The Explanatory Report by Trevor Hartley and Masato Dogauchi - 32 Banking and finance. Banking and finance are fully within the scope of the Convention. International loan agreements are, however, often subject to a nonexclusive choice of court clause. In such a case, the Convention would not apply unless the States concerned had made a declaration under Article 22. An asymmetric choice of court agreement (a choice of court agreement under which one party may bring proceedings exclusively in the designated court, but the other party may sue in other courts as well) is not regarded as exclusive for the purposes of the Convention. Cranston J in LIQUIMAR on the 2005 Hague Convention on Choice of Court Agreements - 37. The Explanatory Report to the Hague Convention by Professors Trevor Hartley and Masato Dogauchi noted that asymmetric jurisdiction clauses are often used in international loan agreements. However, they continued, the Diplomatic Session had agreed that they: "are not exclusive choice of court agreements for the purposes of the Convention." - 38. The Explanatory Report added that such clauses may be subject to the rules of the Convention if the States in question have made declarations under Article 22, which is the clause which provides for reciprocal declarations by Contracting States on the recognition and enforcement of judgments under non-exclusive jurisdiction clauses. - 39. An earlier report by Professors Dogauchi and Hartley, at the time of the drafting of the Convention, suggested that to make it clear that asymmetric jurisdiction clauses were excluded from the definition in what is now Article 3(a) "it might be desirable to add...the words, 'Such an agreement must be exclusive irrespective of the party bringing the proceedings'." That was not done. - 71. The Hague Convention, in my view, offers no assistance in the characterisation of asymmetric jurisdiction clauses under Article 31(2) of Brussels 1 Recast. There is no reference to the Hague Convention in Brussels 1 Recast, although the drafting of both occurred in tandem and Council Decision 2014/887/EU referred to ensuring coherence between the rules of the EU on the choice of court in civil and commercial matters and those of the Hague Convention. - 72. While there is an overlap between the two instruments, however, there are important divergences. Thus there are differences between the two in the formal requirements for exclusive jurisdiction clauses, the Hague Convention in Article 3(c) requiring writing or an accessible form, Brussels 1 Recast in Article 25 allow in agreements to be established on a wider basis, through the practices of the parties or by commercial usage. - 73. Further, there is a definition of exclusive jurisdiction clauses in Article 3(a) of the Hague Convention, whereas there is no definition in Brussels 1 Recast. The reporters record that the Diplomatic Session adopting the Hague Convention accepted that the definition in Article 3(a) did not extend to asymmetric jurisdiction clauses, something the reporters themselves do not seem to have regarded as clear. - 74. There are good arguments in my view that the words of the definition of exclusive jurisdiction clauses in Article 3(a) of the Hague Convention cover asymmetric jurisdiction clauses. For present purposes, however, there is no need to reach a concluded view on the ambit of the definition. Even if it were to be read as excluding asymmetric jurisdiction clauses, however, that in my view is of no assistance as to the quite separate issue of their characterization under Article 31(2) of Brussels 1 Recast. Common Law - Asymmetric jurisdiction agreements are valid and enforceable • Credit Suisse First Boston (Europe) Ltd v MLC (Bermuda) Ltd [1999] 1 All ER 237, p.249G-250A • Bank of New York Mellon v GV Films [2009] EWHC 2338, [14]; • Mauritius Commercial Bank Ltd v. Hestia Holdings Ltd [2013] EWHC 1328 (Comm); [2013] 2 Lloyds Rep 121, [37], per Popplewell J Remedies For Breach Of An English Jurisdiction Agreement - Anti- suit injunction - Damages for breach of contract - Damages for the tort of inducing breach of contract - Indemnity costs for breach of a jurisdiction clause and anti-suit injunction • Clearlake Shipping Pte Ltd v Xiang Da Marine Pte Ltd [2019] EWHC 2658 (Comm) Anti-Suit Injunction For Breach Of An Exclusive English Jurisdiction Agreement - S. 37(1) Senior Courts Act 1981. Discretionary - "just and convenient to do so". - Not permissible where the other proceedings are in the courts of an EU Member State or Lugano Contracting State and the Recast Regulation or 2007 Lugano Convention applies • Case C-159/02 Turner v Grovit EU:C:2004:228; [2005] 1 AC 101 • Case C185/07 Allianz SPA (formerly Riunione Adriatica Di Sicurta SPA) v West Tankers Inc (The Front Comor) [2009] 1 AC 1138; [2009] 1 Lloyd's Rep 413 (London arbitration clause) • Nori Holding Ltd v PJSC Bank Otkritie Financial Corporation [2018] EWHC 1343 (Comm); [2018] 2 All ER (Comm) 1009 (London arbitration clause and Recast Regulation) - What about where the 2005 Hague Convention applies and the other proceedings are for example in Mexico, Singapore, or Montenegro? - Available where the proceedings threatened or commenced are in the courts of a non EU Member State or non Lugano Contracting State. • Donohue v Armco [2001] UKHL 64; [2002] 1 Lloyd's Rep 425 (New York) • Bank of New York Mellon v GV Films [2009] EWHC 2338 (Comm) (India) Conclusions On Asymmetric Jurisdiction Agreements - Asymmetric jurisdiction agreements are exclusive as far as the Borrower is concerned under the Recast Regulation and the 2007 Lugano Convention, subject to the appeal in Etihad. - The position under the 2005 Hague Convention is not clear but there is support in LIQUIMAR and Etihad for saying that asymmetric jurisdiction agreements are exclusive as far as the Borrower is concerned. - At common law asymmetric jurisdiction agreements are exclusive as far as the Borrower is concerned.