EU-Singapore Trade: Forum Selection Clauses (2/2)Friday, 17 March 2017
In 2016, The Netherlands imported over EUR 4,2 billion worth in goods from Singapore. Dutch exports were even more sizeable: almost EUR 4,9 billion. Add to that amount the export of services, worth over EUR 6,6 billion, and it is clear that both countries are major trading partners. Given these close business ties, it will come as no surprise that from time to time, Dutch and Singaporese companies run into contractual conflicts. If that happens, those companies may have to go to court. But will judgments be recognized and enforced abroad as well?
The Convention of 30 June 2005 on Choice of Court Agreements (including explanatory report) is an instrument of international law relevant for answering these questions. Signed by the EU, USA, Mexico, Singapore and the Ukraine, it entered into force as between the EU and Singapore in 2016.
The Convention aims to promote international trade and investment through enhanced judicial co-operation, by laying down uniform rules on jurisdiction and on recognition and enforcement of foreign judgments in civil or commercial matters (Article 1(1)). It applies when EU and/or Singaporese parties conclude an exclusive choice of court agreement: “an agreement concluded by two or more parties [in writing or otherwise accessible] and designates, for the purpose of deciding disputes which have arisen or may arise in connection with a particular legal relationship, the courts of one Contracting State or one or more specific courts of one Contracting State to the exclusion of the jurisdiction of any other courts” (Article 3(a))).
Parties do not have to designate an individual court. A reference such as “the courts of State [X] have jurisdiction” is permitted, as long as it concerns a group of courts in the same country. Furthermore, it is not required to state that the agreement is exclusive. Designating specific courts will automatically render it exclusive.
Recognition and enforcement: basis principle
The EU and Singapore in principle recognize and enforce all judgments given by the court parties chose (Article 8(1)). The same goes for judicial settlements achieved before that court (Article 12).
Recognition and enforcement: look out for difficulties ahead
It would be misleading to suggest that all judgments given by the forum parties chose are recognized and enforced abroad. The Convention contains a number of exceptions and pitfalls. I will discuss the most poignant.
Firstly, when a matter excluded from the scope of the Convention ratione materiae arose as a preliminary question, the ruling on that question is not recognised or enforced (Article 10(1)).
Secondly, courts in other Contracting States may refuse rulings on matters excluded from the scope of the Convention ratione materiae. This might amount to partial refusal of a judgment, i.e. the part that deals with a matter exlcuded from the scop of the Convention (Article 10(2)). In case of IP litigation, specific rules apply (Article 10(3)).
Thirdly, recognition or enforcement of a judgment may be refused if, and to the extent that, the judgment awards damages, including exemplary or punitive damages, that do not compensate a party for actual loss or harm suffered (Article 11(1)). Damages awarded by the court of origin serve to cover costs and expenses relating to the proceedings should be seen as separate from this assessment (Article 11(2)).
Fourthly, recognition and enforcement in other Contracting States is not automatic. A party must produce:
- a complete and certified copy of the judgment;
- the exclusive choice of court agreement, a certified copy thereof, or other evidence of its existence;
- under certain circumstances, additional (procedural) evidence (Article 13(1)).
Fifthly, the procedure for recognition, declaration of enforceability or registration for enforcement, and the enforcement of the judgment, is in principle governed by the law of the requested State. Domestic procedural rules may give rise to further complications.
If you require more information on drafting contracts or Dutch or EU courts, please feel free to contact one of our international commercial litigation experts, Adriaan Buyserd.