Glad tidings in the recognition and enforcement of judgments: The UK is to ratify the 2019 Hague Convention

On 23 November 2023, the UK Government published its response to the consultation paper on the Hague Convention of 2 July 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (see the previous post related to the consultation and the groundwork of the process here The Ball is Rolling: The UK to ratify the Hague Judgments Convention? – The Institute of International Shipping & Trade Law (IISTL) Blog). Having considered the responses received, the Government has concluded that it is the right time for the UK to join Hague 2019 and will seek to do so as soon as practicable. Indeed, it is clear from the paper that a total of 39 responses were received from across the UK’s legal sector, both practitioners and law firms as well as academics, and all of the consultees supported the UK’s accession to the HJC.

The Convention has been in force since 1 September 2023 as the only global instrument containing uniform rules for the mutual recognition and enforcement of judgments in civil and commercial disputes for the EU, Ukraine and Uruguay as the existing Contracting States. Joining the Convention will indeed ensure greater legal certainty and promote the UK’s reputation as a preferred forum for resolving international civil and commercial cases. Indeed, it will contribute to a swift resolution of disputes by shortening expenses and time frames for businesses and consumers because of the facilitated recognition and enforcement of the final decisions. The latter will in turn boost commercial parties’ confidence while operating across borders with increased clarity about the effectiveness of their judgments.

The Government’s response further highlighted the fact that judgments from non-exclusive choice of court agreements, which are excluded from the scope of the 2005 Hague Convention on Choice of Court Agreements (HCCCA), are enforceable under Hague 2019, which will likely increase the attractiveness of the UK financial services industry. Having ratified the HCCCA, the UK has guaranteed the effectiveness of the English exclusive jurisdiction clauses in all other Hague Contracting States and vice versa. In fact, the HJC complements the HCCCA with the same objectives and further covers judgments given by non-exclusively designated courts; therefore, joining the HJC will enhance party autonomy and ensure the effectiveness of an entire range of choice of court agreements.

Additionally, becoming a Contracting State to the HJC will significantly contribute to legal certainty in the post-Brexit era together with its sister instrument HCCCA. The relevant instruments will get reciprocally given effect in the UK and EU. Further, given the fact that the territorial scope of the Convention is expanding having Israel, Russia, Costa Rica, North Macedonia and the US already signed so far, joining the treaty will enhance the global enforceability of judgments.

In addition to the potential benefits of the HJC, the Government is also well aware of the downsides of the mechanism. In this context, the Government’s response underlines several concerns that have been raised by the consultees. These include the risks regarding the UK courts’ potential obligation to recognise and enforce foreign judgments under the HJC in the absence of an obligation under the common law or existing arrangements. Further, potential issues related to procedural fairness and rule of law in the origin country have also been mentioned. Yet, the Government considers that there are adequate safeguards such as making declarations under Article 29 to prevent the application of the Convention with regard to a particular Contracting State at the time of ratification of that state. Additionally, the recognition and enforcement of judgments can be refused if one of the grounds in Article 7 can be established, including if certain procedural fairness requirements have not been met and where recognition or enforcement would be manifestly incompatible with the public policy of the UK. Moreover, the Government is in the view that while Article 5 gives a list of indirect jurisdiction grounds and wider possibilities for recognition and enforcement in some circumstances, it also requires clear thresholds that parties must meet.

The Government also mentions the concerns raised regarding the exclusions and the more limited scope of the HJC compared to the Lugano Convention for which the UK applied to join. Yet, the potential merits of the HJC outweigh any possible downsides and joining the latter does not prevent the UK’s future reaccession to the Lugano regime. Another point that is noted by the Government is that the HJC does not change or remove existing recognition and enforcement mechanisms provided by domestic law in the UK and other Contracting States, on which parties can continue to rely for the recognition and enforcement of cases not covered by the treaty.

Regarding possible declarations under the relevant provisions of the HJC, the Government supports the respondents’ views about the potential of restricting the Convention’s application and likely reciprocal actions from other Contracting States which would further limit the scope of the Convention. In line with the consultees’ views, the Government thinks that the UK should not make any declarations at this time (nor any declaration in regard to insurance matters) but it will keep the questions of declarations under review as it proceeds to signature and implementation, and in future as the Convention comes into force between the UK and current and future Contracting States.

The Government concluded that the HJC should extend to all of the UK jurisdictions to ensure consistency and ensure that all jurisdictions can benefit from the advantages of the Convention. Also as observed in the respondents’ comments, the Government is planning to use a registration model for implementing the mechanism same as what is used for the implementation of the HCCCA 2005, which would require foreign judgments to be registered prior to their enforcement in the UK. It means that parties seeking to have a foreign judgment recognised and enforced in the UK under the HJC would need to apply to the court, setting out the applicable indirect jurisdiction ground, amongst other things, and provide the necessary evidence. Parties objecting to the recognition and enforcement of the foreign judgment would then have an opportunity to challenge the registration before enforcement takes place, by way of appeal against or setting aside of the registration.

The Government will further consider the details of this implementation model particularly in relation with the challenges highlighted by respondents for the indirect jurisdiction aspects of the procedures. In line with this, the suggestion to amend the jurisdiction grounds currently found in Practice Direction 6B and adjusting them to Article 5 of the HJC, will be passed onto the Master of the Rolls and the Civil Procedure Rule Committee for consideration. Moreover, since this might become a devolved matter in respect of Scotland and Northern Ireland, Government officials will continue to work closely with their counterparts in the Scottish Government and in Northern Ireland to ensure implementing frameworks are in place in all 3 jurisdictions ahead of ratification of the Convention. Overall, the Government will work with the Crown Dependencies and the Overseas Territories to determine if the Convention should extend to these territories.

The Government has further considered the concerns in relation to signature by Russia and considers that the UK should sign the Convention with the understanding that a future notification in relation to the Russian Federation under Article 29 might be available to prevent the Convention applying between the UK and Russia, should there be any development in the latter’s ratification of the treaty.

In summary, based on all the responses and comments received during the Consultation process, the Government estimates there will be a positive impact on businesses that operate across borders, because they will have a predictable, more certain and uniform way to enforce judgments that they might need to seek to resolve disputes. The Government also estimates that there will be a positive impact on the litigation sector. The Government will undertake further work to quantify the impact and issue guidance when implementing the Convention.

The Government is planning to lay the Convention in Parliament soon ahead of ratification and to make sure the implementing legislation is in place for the three jurisdictions ahead of the accession. Once ratified, the HJC will be implemented in domestic law mainly using powers in the Private International Law (Implementation of Agreements) Act 2020 as well as via rules of court in all 3 jurisdictions of the UK subject to appropriate parliamentary scrutiny. As provided in Articles 28 and 29 of the HJC, the Convention would enter into force for the UK 12 months after the date it deposits its instrument of ratification.

See Government response to the Hague Convention of July 2019 on the Recognition and Enforcement of Foreign Judgements in Civil or Commercial Matters (Hague 2019) – GOV.UK (www.gov.uk)

Twenty one years on and still fighting over the ‘Prestige’. Registering a foreign judgment in England and the Brussels Regulation.

Butcher J’s judgment of October 6, [2023] EWHC 2473 (Comm), provides us with the latest chapter in the long-running saga between Spain and the London P&I Club regarding the former’s attempts to register its Supreme Court Judgment of 2016 in England. The Club had a declaratory award of non-liability against Spain from Mr Schaff which it successfully converted into a judgment in a decision of Hamblen J, which was upheld by the Court of Appeal (The Prestige (No. 2) [2015] EWCA Civ 333, [2015] 2 Lloyd’s Rep 33). Subsequently, Henshaw J and the Court of Appeal The Prestige (Nos. 3 & 4) [2021] EWCA Civ 1589, [2022] 1 WLR 3434. found that damages would not result from Spain’s failure to comply with an award that was purely declaratory, but the Club obtained permission from the Court to appoint an arbitrator under s.18 of the Arbitration Act 1996 in a second arbitration claiming either damages or equitable compensation.

At the end of 2020 just prior to the ending of the Brexit transition period, Butcher J, who had been hearing the Club’s appeal against Spain’s obtaining a Registration Order for its 2016 Judgment, referred three questions to the CJEU. Shortly after the Court of Appeal found that he was wrong to make the reference but only he could withdraw the reference. Before that could be done, the CJEU gave their judgment, which did not bode well for the Club. In paras 54-73 the CJEU had found that, while a judgment on an arbitration award might fall within Article 34(3), this was only when a judgment on the same terms could have been entered by the enforcing court, and then to provide ‘guidance as to how that test should be applied to the facts presented to the CJEU in this case.’ This ‘guidance’ was that ‘the content of the arbitral award at issue in the main proceedings could not have been the subject of a judicial decision falling within the scope of Regulation No. 44/2001 without infringing two fundamental rules of that regulation concerning, first, the relative effect of an arbitration clause included in an insurance contract and, secondly, lis pendens.’ Further, it was not simply for the court seised with the enforcement application under the Regulation to consider and apply these principles, but the court seised with the application to enter the judgment in the terms of the arbitral award.’

Permission to appeal the Court of Appeal’s Judgment to the Supreme Court had been granted to Spain and a hearing scheduled, which was suspended with the agreement of the parties after the CJEU Judgment appeared. Later in 2022 Spain’s application for permission to appeal to the Supreme Court against the Court of Appeal’s Judgment in the Prestige 3 & 4 was turned down.

Since then, the Club has continued its appeal against Registration of the Spanish Judgment and in January and March 2023 it obtained two partial awards in its favour from Sir Peter Gross, appointed as sole arbitrator for the second arbitration. The awards were to the effect that Sir Peter Gross had jurisdiction as arbitrator, the arbitration exclusion in Brussels I meant that the CJEU erred in its findings at paragraphs of its judgment, equitable compensation could be awarded against Spain, potentially injunctive relief too, although the arbitrator exercised his discretion not to award such relief, and damages could also be awarded in lieu of an injunction.

The Club’s appeal came before Butcher J, along with Spain’s challenges to the awards of Sir Peter Gross under ss 67, 68 and 69 of the Arbitration Act 1966. Butcher J has essentially agreed with the findings of Sir Peter Gross, except as regards the availability of injunctive relief, due to s.13(2) of the Sovereign Immunity Act 1978, and the availability of damages in lieu of an injunction. He deferred a decision on the availability of injunctive relief against a State till after the decision of the Court of Appeal in UK P&I Club N.V. v Republica Bolivariana de Venezuela (The ‘Resolute’) [2022] 1 WLR 4856which is scheduled to be heard this December. On the key question of the effect of the CJEU’s judgment he noted that CJEU had considered questions beyond the three he had referred, and concluded, as had Sir Peter Gross, there was an issue estoppel to the effect that the jurisdiction-allocation provisions of the Regulation, and in particular its lis pendens and insurance provisions, were no good reason for the English s. 66 Judgments not to have been entered because the Regulation is not applicable to arbitration. Specifically, the CJEU did not take into account that, because of the issues which had been raised and decided in the earlier proceedings, there might be res judicatae relevant to the line of reasoning which it adopted. The Court could and should give effect to that issue estoppel, notwithstanding what may have been suggested in paragraphs [54]-[73] of the CJEU Judgment, and  the decision in the relevant part of the CJEU Judgment could not be binding.

Butcher J found that the Club’s Appeal against the Registration Order succeeded because the Spanish Judgment was irreconcilable with the English s. 66 Judgments, and, if that were wrong, recognition of the Spanish Judgment would be contrary to principles of English public policy relating to res judicata by reason of the prior Award of Mr Schaff.

Spain were given permission to appeal under s.69 on all of its four grounds of challenge, save that part of ground 1 which raised the issue of the effect of the CJEU Judgment on the jurisdiction of Sir Peter Gross as arbitrator. The appeal under s. 69 AA 1996 on grounds (1) and (2) (relating to the CJEU Judgment) and (4) (relating to equitable compensation) was dismissed. On ground (3) regarding injunctive relief against Spain and damages in lieu of an injunction, Butcher J concluded that Sire Peter Gross had no jurisdiction to grant either relief, but deferred his decision until after the decision of the Court of Appeal in The Resolute.

On the same day Butcher J gave a similar decision  [2023] EWHC 2474 (Comm) in relation to France’s applications in connection with two partial awards from the Arbitrator appointed by the Club, Dame Elizabeth Gloster, in which it sought declarations that the French State was in breach of its obligations not to pursue the non-CLC claims other than by way of London arbitration, injunctive relief, and an order that the French State pay to the Club such sums as the Club is ordered to pay to the French State in any jurisdiction in which the Spanish Judgment is recognised or enforced, as well as compensation for its costs of defending the non-CLC claims in Spain.

France did not seek to register the Spanish Supreme Court Judgment in England. It sought leave to appeal four questions of law arising out of the Awards, pursuant to s. 69 AA 1996 and an extension of time to appeal the first partial award.

Ground 1: whether the arbitral tribunal had the power to grant an injunction against the French State under s. 48(5) AA 1996;

Ground 2: whether the arbitral tribunal had the power to award equitable compensation for breach of an equitable obligation to arbitrate arising by application of the conditional benefit principle, or whether equitable compensation is otherwise available in these circumstances; Ground 3: whether an anti-enforcement injunction can be granted where its effect is to restrain enforcement of a foreign judgment which is granted recognition under English law; and

Ground 4: whether equitable compensation can be granted where its effect is to neutralise the effect of a foreign judgment which is granted recognition under English law.

Butcher J found that France required an extension of time to bring its s.69 AA 1996 application in respect of matters decided in the First Partial Award and one should be granted on Grounds 1 and 2, but not on Grounds 3 and 4. There should be permission to appeal on Grounds 1 and 2, but there would not have been such permission on Grounds 3 and 4. The appeal on ground 2 was dismissed. In relation to Ground 1 he concluded that the arbitrator had no jurisdiction to grant and injunction against the French state but his decision was deferred until after the Court of Appeal had come to a decision in the ‘Resolute’.

Arbitration agreements — for once, perhaps we should be the world’s policeman

Whatever the position as regards English jurisdiction clauses, we’ve known for nigh on a quarter-century that you can’t get an ASI in London to protect the agreed jurisdiction of a foreign court. In 1998 Airbus Industrie G.I.E. v Patel [1999] 1 A.C. 119, our judges firmly eschewed the idea that they should operate as a kind of Global Good Litigation Police, and said that that foreign fora wanting to guard their jurisdiction as a choice of place to litigate could be expected to do their own dirty work.

But what about arbitration? Does a similar rule apply to complaints that a defendant is blithely suing away in Ruritania under a contract containing on the face of it a clause calling for arbitration in Utopia? A decision a week ago from Sir Nigel Teare suggests a possible Yes.

In G v R [2023] EWHC 2365 (Comm) suit was brought in Russia on a performance bond governed by English law. The claimant pointed out that the bond provided for any disputes to be settled by ICC arbitration in Paris, and to make sure this happened sought an ASI from the High Court. Could it get it? The answer was a fairly resounding no. In fact the claimant fell at the first fence; having failed to show that the agreement to arbitrate, as against the main contract, was governed by English law, he failed to seise the court of the matter in the first place.

But apart from that, even if the contract to arbitrate had been governed by English law, the judge thought England was not shown to be the appropriate jurisdiction. The fact that England could grant ASI relief whereas the French court, as the court of the seat, could not, went for little: the parties having chosen a French seat, there was nothing wrong with saying that having made their bed they should lie in it, and thus be stuck with the limited remedies available in France. Nor was there much relevance in a (hypothetical) English governing law, even if that had been chosen, since there was unlikely to arise any serious issue of English law that it would be difficult for a foreign tribunal to determine.

We have, if we may say so with great respect, our doubts about this decision.

First, there is an argument that if parties choose to have an arbitration agreement governed by English law, that should incline a court in favour of doing their best to make available the remedies normally applying in English law for breach of it. If so it should actually be a strong pull in favour of the English courts being an appropriate venue. The parties in G v R, had they (as the claimant argued) chosen English law as the lex arbitri, would one suspects have been somewhat nonplussed at the information that the English courts were nevertheless closed to them as an inappropriate forum. To that extent, the differing view of the Court of Appeal on an interlocutory appeal in SQD v QYP, decided the day before G v R (and noted here), and also a similarly divergent view expressed in March this year by Calver J (noted here), seem to carry more conviction.

Secondly, unlike choice of court agreements, there is something approaching an agreed international regime in force for international arbitration agreements under the New York Convention, which very strongly favours giving the most robust protection possible to such agreements. (Indeed, it was the notoriously casual attitude of the Russian courts towards the New York Convention that spawned the satellite litigation in G v R in the first place.) There is something to be said for an “all hands to the pumps” approach here, with the English courts doing their best to uphold the New York system.

This issue is clearly heading fast towards the Court of Appeal, if not further. Meanwhile, what should practitioners do if they wish to feel secure in reserving their seat on the Eurostar for that ICC session in Paris? First, they must make clear, preferably expressly, that the lex arbitri is English – something doubly important, if the Law Commission’s recommendation is enacted that the presumptive lex arbitri should always be that of the seat, rather than that of the matrix contract.

They should also – as some already do — expressly confer at least non-exclusive jurisdiction on the English court in matters related to the arbitration agreement. Not only will this make service out easier: it will make it much harder for another party to deny that the English court is indeed the appropriate one to seek relief in. True, the parties cannot force the court by agreement to exercise its discretion in favour of the always-discretionary remedy of an injunction. But they can sure use tactful means to smooth its way to that destination.

EU top court: no avoiding the bar on intra-Europe ASIs by bringing a damages claim instead. But how far does it matter post-Brexit?

Don’t say it too loudly, especially when there’s a European listening, but yesterday’s CJEU decision in The Alexandros T (C-590/21) [2023] EUECJ C-590/21 might make some English lawyers a bit more relieved that Brexit happened. Put simply, the EU court has held that just as under EU law you can’t get an anti-suit injunction in an EU court preventing suit elsewhere in Europe, you equally can’t sue a litigant for damages for bringing suit there in breach of contract. But this will not affect any ost-2021 proceedings here.

The Alexandros T, a Capesize bulker of 172,000 dwt, will be familiar to most readers. She sank off South Africa in 2006, taking with her 26 crew and a large cargo of Brazilian iron ore destined for China. Her hull insurers were initially not entirely convinced about the resultant claim against them, but around Christmas 2007 paid a sum in settlement under an agreement governed by English law. That agreement provided for a release of the underwriters and everyone associated with them and contained a London jurisdiction clause in respect of any dispute.

Little did the underwriters know that this was not the end, but – this being well before Brexit – rather the beginning of a massive game of juridical Euro-ping-pong.

Four years after the settlement, Alexandros T’s owners Starlight brought proceedings in Greece against the underwriters and also Charles Taylor, a marine insurance consultancy that had acted for them. They claimed big money on the basis that the underwriters and others had indulged in skulduggery in defending the claim, and had acted tortiously in blackening Starlight’s name and causing it serious losses.

Unable to get an anti-suit injunction because of settled EU law based on the full faith and credit principle, the underwriters countered by suing Starlight in England for damages for breach of the settlement agreement (i.e. the costs of defending, and anything they were forced to pay under, the Greek suit). Starlight attempted to invoke the Greek proceedings to stop these latter proceedings in their tracks under the lis alibi pendens provisions of what was then Art.27 of Brussels I (now Art.29 of Brussels I Recast). However they failed, it being held by the Supreme Court that the claims were merely related and did not involve the same subject-matter, and that the new claims should be allowed to go forward. (See The Alexandros T [2013] UKSC 70; [2014] 1 Lloyd’s Rep. 223.) The underwriters duly proceeded, and Burton J’s judgment giving damages against Starlight was upheld by the Court of Appeal in July 2014 in Starlight Shipping Co v Allianz Marine & Aviation Versicherungs AG [2014] EWCA Civ 1010; [2014] 2 Lloyd’s Rep. 544.

Having got this judgment, the underwriters took the battle to the enemy and sought to have it recognised in Greece. The Piraeus Court of Appeal refused recognition, holding in 2019 that it would be manifestly contrary to public policy under Art.34 of Brussels I (Recast Art.45). The Areios Pagos, the Greek Supreme Court, sought the opinion of the CJEU.

Yesterday that court, in a short (by EU standards) judgment, went against the underwriters. It said, first, that a claim for damages for suing in another EU court, being dissuasive of the maintenance of EU proceedings and aimed at impeding them, was no more permissible under the Brussels I scheme than a claim for an anti-suit injunction (see [25]). It then went on to say that this factor provided ample justification for a court in the EU to say that to enforce or recognise a judgment arising out of such a claim was manifestly contrary to EU (and hence national) public policy. It therefore gave a green light to the Greek courts to refuse recognition of the 2014 judgment, something which will no doubt formally take place in the not too distant future.

Fairly predictable was the holding that claims for damages for suing in an EU court were prohibited by Brussels I, contrary to English decisions the other way – notably West Tankers Inc v Allianz SpA [2012] EWHC 854 (Comm); [2012] 2 Lloyd’s Rep. 103. A combination of post-Brexit Schadenfreude, the court’s highly sensitive political antennae, and its ingrained instinct for centralisation of power Brussels-ward whenever possible, saw to that. But in respect of post-Brexit proceedings it is not now very important: such actions for damages continue available in England whatever Brussels says, and the betting must now be that the UK will never again sign up to any jurisdictional framework in the Brussels-Lugano mould.

That leaves the holding that judgments obtained here for damages are not portable to Europe by way of recognition. This raises two issues.

First, it will make the enforcement of judgments like that in The Alexandros T slightly harder – though perhaps this difficulty should not be exaggerated, since most of those involved in international trade will at some time want to deposit monies in London which can then be the subject of execution proceedings.

Secondly, there is a nice issue whether the EU position would survive a UK ratification of the 2019 Hague Judgments Convention, which by Art.7(1)(c) contains a similar public policy let-out. You might think it did: but matters aren’t as simple as that. Unlike Brussels I, the Hague Convention is not an EU instrument and it is therefore not automatically subject to overriding EU public policy considerations to the same extent. It is certainly possible that the EU would be in breach of Hague if the CJEU decided that judgments given in non-EU courts for damages for suing in EU courts were automatically excluded from its ambit as they are from Brussels I. We’ll just have to wait and see.

A DAY TO REMEMBER: THE 2019 HAGUE JUDGMENTS CONVENTION ENTERS INTO FORCE

At last, we no longer lack functional global rules for the recognition and enforcement of judgments. Only a couple of days ago, on 1 September 2023, the Hague Judgments Convention 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (HJC) entered into force. This is a momentous event for private international law and a real game-changer for international dispute resolution. With its entry into force, the HJC can now be utilised by commercial parties and contribute to a swift resolution of disputes by shortening expenses and timeframes for the recognition and enforcement of a foreign judgment in other jurisdictions. Having adopted the HJC, the Hague Conference achieved its target to guarantee the effectiveness of court judgments similar to arbitral awards as ensured by the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

A year ago and almost around the same time we provided some comments on the provisions of the Convention determining the procedure for becoming effective (see here: Hague Judgments Convention to enter into force! – The Institute of International Shipping & Trade Law (IISTL) Blog). According to Articles 28 and 29 of the HJC, the Convention shall enter into force on the first day of the month following the expiration of the twelve months after the second State has deposited its instrument of ratification, acceptance, approval, or accession. On this occasion, the Convention was ratified by Ukraine and the EU on 29 August 2022, and now has a force of law for both. In addition, Uruguay ratified the treaty on 1 September, and it will come into force for the latter 12 months later.

The HJC provides recognition and enforcement of judgments given in cross-border civil and commercial cases, excluding the carriage of passengers and goods, transboundary marine pollution, marine pollution in areas beyond national jurisdiction, ship-source marine pollution, limitation of liability for maritime claims, and general average. That being said, the HJC is not an ideal framework and does not include every issue that might arise from civil and commercial cases. Yet, it complements the HCCCA not only by sharing the same objectives but also by covering judgments given by non-exclusively designated courts; therefore, it indeed serves party autonomy and ensures the effectiveness of an entire range of choice of court agreements.

The Convention further contributes to certainty and access to justice post-Brexit since it is the only international treaty providing rules for the recognition and enforcement of judgments in cross-border commercial disputes. However, the UK has not ratified the Convention yet and even if it does, the Convention will enter in and for the UK only twelve months after the date it deposits an instrument of ratification. Following the analysis, the Government will make its final decision on becoming a Contracting State to the HJC and on whether to make any reservations. If signed and ratified, the Convention would be implemented in domestic law under the terms of the Private International Law (Implementation of Agreements) Act 2020, subject to appropriate parliamentary scrutiny. Indeed, if ratified, the HJC will not only contribute to access to justice and effectiveness of judgments involving EU-related civil and commercial cases but also the UK’s global judicial cooperation with the other Hague Contracting States will be enhanced. For the previous post related to the UK’s plans to ratify the HJC see: The Ball is Rolling: The UK to ratify the Hague Judgments Convention? – The Institute of International Shipping & Trade Law (IISTL) Blog.

Yet, we must admit the HJC leaves significant matters unresolved. Besides excluding extremely important commercial matters from its application scope, the Convention does not contain any specific regulation of parallel proceedings, lis pendens, and related actions – the famous yet infamous Brussels terminology. In this regard, there is a hope that the Hague Conference will succeed in its Jurisdiction Project. Indeed, if the latter is achieved the three Conventions might well function together and provide safeguards for international commercial parties and global justice.

Choice of court agreements — the Hague Convention 2005 means what it says

It’s not often we get decided cases on the 2005 Hague Convention on Choice of Court Agreements. But the Irish High Court produced a helpful one last week, which practitioners on both sides of St George’s Channel would do well to bear in mind.

In Compagnie de Bauxite & d’Alumine De Dian Dian SA v GTLK Europe DAC [2023] IEHC 324 GTLK, a company controlled by the Russian state but registered in Ireland, had issued a demand guarantee for $20 million in favour of the plaintiffs CBA SA. The guarantee, stated to be governed by English law and subject to the exclusive jurisdiction of the English courts, was in respect of a contract by a Cypriot entity, POLA, to aid CBA in the shipment of quantities of bauxite from Guinea to an aluminium smelter in Limerick.

POLA allegedly fell down in its performance and CBA claimed under the guarantee. GTLK, by then sanctioned by the EU following the Ukrainian debacle, denied liability (predictably if somewhat quixotically, the guarantee being a demand bond), and did its best to play hard to get, pointing out smugly that in any case EU sanctions prohibited it from making any payment without a derogation from the Irish government.

Exasperated, CBA finally sued GTLK in Ireland, claiming payment and potentially a mandatory injunction ordering it to seek the necessary official derogation to enable it to meet any judgment. Faced with the tricky argument that the English jurisdiction clause brought the case directly within the Hague Convention which not only permitted but required the Irish courts to stand aside, CBA argued that enforcing this clause would give rise to manifest injustice within Article 6(c) of the Convention. Why, it said, should it be forced to sue in London and then seek to port its judgment to Dublin, where GTLK’s assets were? Why should it have to face the double uncertainty of whether an English court could issue a mandatory order to an Irish company to petition its own government in Dublin, and if it could whether any such order would be enforceable in Ireland? Was not the injustice was made worse by GTLK’s delay in making its position clear, coupled with CBA’s expenditure of considerable sums on Irish lawyers?

Twomey J was having none of it. He essentially accepted the views of the Hartley and Dogauchi report produced by the HCCH, that “manifest injustice” was a very restrictive concept indeed, being limited to cases such as fraud, corrupt courts and genuine inability of a party to access the chosen forum. Here the essential complaint of CBA was merely that they found it thoroughly inconvenient to have to abide by the clause thay had agreed to: but neither this, nor the fact that there had been some little delay by GTLK and expenditure by CBA, came close to showing manifest injustice.

This must, with respect, be right. The message coming from the Convention is that, very exceptional cases aside, a person who has agreed to exclusive jurisdiction has made his bed and has to lie in it: to this extent, the rule under Hague is a good deal stricter than that at common law, under which a stay of local proceedings may be refused if there are strong reasons to do so (e.g. The El Amria [1981] 2 Lloyd’s Rep. 119 and Citi-March Ltd v Neptune Orient Lines Ltd [1996] 1 W.L.R. 1367). Any reinforcement of this message is a good thing, and will one suspects be welcomed by business.

Two other minor points are worth noting.

First, what happens about the case where a defendant genuinely leads a claimant to believe that he will not invoke the Convention and a claimant then irrevocably seriously relies on this? The Convention does not include estoppel within the Art.6 exceptions to the duty of a national court other than the chosen court to decline jurisdiction. It is to be hoped, however, that English and Irish courts will accept that where estoppel would otherwise be made out, then Article 6(c) will encompass it.

Secondly, on an unconnected issue Twomey J seemed to accept the possibility of a mandatory order on a sanctioned defendant against whom judgment was given to take at least some steps to attempt to lift the sanctions. This would certainly be a useful remedy against stonewalling by a sanctioned entity, and it seems unobjectionable as a matter of principle. Not only was this apparently recognised explicitly in the Irish legislation effectuating the 2005 Convention (see s.9 of the Choice of Court (Hague Convention) Act, 2015), but in England it seems well within the scope and intention of s.37(1) of the Senior Courts Act 1981.

In short, a useful little judgment which English and Irish lawyers alike would be well advised to keep a copy of on their hard disks.

The Ball is Rolling: The UK to ratify the Hague Judgments Convention?

On 15 December 2022, the UK government published a public consultation paper on the possible ratification of the Hague Judgments Convention 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (HJC). With the UK-wide call open in all three jurisdictions by 9 February 2023, the Government is seeking expert views from practitioners, academics, businesses, and any other persons with an interest in or who may be affected by cross-border civil and commercial litigation in the UK on its very welcome plan to become a Contracting State to the Convention. Besides the open call and public responses, the officials including experts from the Lord Chancellor’s Advisory Committee on Private International Law will get involved in the consultation before the publication of the outcomes.

The Hague Conference on Private International Law (HCCH) adopted the HJC on 2 July 2019 – 27 years after the initial proposal of a mixed instrument covering both jurisdiction and recognition and enforcement rules. Indeed, to guarantee the effectiveness of court judgments similar to what the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (the New York Convention) ensured for arbitral awards, the HJC has become a game-changer in the international dispute resolution landscape. As the HCCH announced, “the Convention will increase certainty and predictability, promote the better management of transaction and litigation risks, and shorten timeframes for the recognition and enforcement of a judgment in other jurisdictions.”

In August 2022, with the subsequent ratifications of the Convention by the EU and Ukraine, its entry into force became a long-awaited reality and indeed, the Convention is about to enter into force from 1 September 2023 (see my earlier blog post here: Hague Judgments Convention to enter into force! – The Institute of International Shipping & Trade Law (IISTL) Blog).

As the jurisdiction is well-known for its strong legal traditions and robust private international law rules, the UK instantly enhances its routes of international judicial cooperation to ensure certainty and predictability for citizens and businesses involved in cross-border commercial relationships. Most likely, the EU’s opposition to the UK’s application to ratify the Lugano Convention will impede the ratification of the HJC for the provision of continuing civil judicial cooperation.

The HJC provides recognition and enforcement of judgments given in civil and commercial cases excluding the carriage of passengers and goods, transboundary marine pollution, marine pollution in areas beyond national jurisdiction, ship-source marine pollution, limitation of liability for maritime claims, and general average. As a complementary instrument to the Hague Convention on Choice of Court Agreements 2005 (HCCCA), the HJC shares the same goals to ensure commercial certainty and access to justice, serve legal certainty and uniformity by providing free circulation of judgments and parties’ autonomy, also, advances multilateral trade, investment, and mobility. The HJC also aims at judicial cooperation and recognition and enforcement of judgments given by the courts designated in the parties’ agreement, other than an exclusive choice of court agreement whereas the HCCCA applies to exclusive jurisdiction agreements and resulting judgments.

The HJC is the only global instrument for mutual recognition and enforcement of judgments in civil and commercial disputes. It will significantly contribute to legal certainty in the post-Brexit era with its sister instrument HCCCA. Indeed, it is the UK’s turn to take appropriate measures to accede to the treaty for facilitating the free movement of judgments in civil and commercial cases between the UK and the EU.

Following the analysis, the Government will make its final decision on becoming a Contracting State to the HJC and on whether to make any reservations. If signed and ratified, the Convention would be implemented in domestic law under the terms of the Private International Law (Implementation of Agreements) Act 2020, subject to appropriate parliamentary scrutiny. As provided in Articles 28 and 29 of the HJC, the Convention would enter into force for the UK 12 months after the date it deposits its instrument of ratification.

Further details of the paper and consultation questions are available here: Consultation on the Hague Convention of 2 July 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (Hague 2019) – GOV.UK (www.gov.uk).

What’s coming in 2023?

What’s coming in 2023?

Nearly two weeks into the New Year and the IISTL’s version of ‘Old Moore’s Almanack’ looks ahead to what 2023 is going to have in store us.

Brexit. EU Retained EU Law (Revocation and Reform) Bill will kick in at end of the year. It will be a major surprise if the two Conflicts Regulations, Rome I and Rome 2 aren’t retained, but not the Port Services Regulation.

Ebury Partners Belgium SA/NV v Technical Touch BV, Jan Berthels [2022] EWHC 2927 (Comm) is another recent decision in which an ASI has been granted to restrain proceedings in an EU Member State (Belgium) in respect of a contract subject to English jurisdiction.

Electronic bills of lading. Electronic Trade Documents Bill. Likely to become law in 2023 and to come into effect two months after getting Royal Assent. The Law Commission will publish a consultation paper “Digital assets: which law, which court?” dealing with conflicts of law issues in the second half of 2023.

Autonomous vessels. The Department for Transport consultation on MASS and possible amendments to the Merchant Shipping Act 1995 closed in November 2021. Maybe some results in 2023?

Supreme Court cases

Okpabi v Royal Dutch Shell. The case may well go to trial in 2023, although in May 2022 the High Court EWHC 989 (TCC), held it was premature to grant a  Group Litigation Order and directed that each individual claimant should specify additional details to formulate a proper cause of action for the defendants to respond to.

In similar proceedings in the Netherlands in which the Court of Appeal in the Hague gave judgment in January 2021 relating to multiple oil pipeline leaks in the Niger Delta, it was announced just before Christmas 2022 that Shell will pay 15 million euros ($15.9 million) to the affected communities in Nigeria in full and final settlement on a basis of no admission of liability.

The Eternal Bliss appeal to the Supreme Court is likely to be heard in 2023, with possibility of judgment given in 2023.

But there must be a question mark over London Steam-ship Owners’ Mutual Insurance Association Ltd (Respondent) v Kingdom of Spain (Appellant), Case ID: Case ID 2022/0062 where it is stated “This appeal has been adjourned by request of the parties.”

Climate Change

IMO  Two measures aimed at reducing shipping’s contribution to GHG emissions,   EEXI and Cii, both came into force as from 1 January 2023 and will be in the forefront of the minds of those negotiating new time charters.

EU. Shipping is likely to come into the ETS system with the amendments to the 2003 ETS Directive with phasing in from 1 January 2024. Here and here.

BIMCO has produced time charter clauses to deal with all three of these measures.

Ewan McGaughey et al v. Universities Superannuation Scheme Limited is a case involving whether the investments in fossil fuels by a large pension fund in the UK breach the directors’ fiduciary duties and duties towards contributors of the pension fund. On 24 May 2022, the High Court refused permission to bring a derivative action against USSL, but the Court of Appeal gave permission to appeal in October 2022, so a hearing in 2023 is “on the cards”.

European Union

On 15 July 2022, the EU Taxonomy Complementary Climate Delegated Act covering certain nuclear and gas activities came into force on 4 August 2022 and has applied from 1 January 2023. A legal challenge against the Commission before the CJEU by various NGOs and two member states, Austria and/or Luxembourg has been threatened in connection for the inclusion of nuclear energy and natural gas in the Delegated Act. Climate mitigation and adaptation criteria for maritime shipping, were included in the EU Taxonomy Climate Delegated Act adopted in April 2021.

Previous requests from other NGOs asking the Commission to carry out an internal review of the inclusion of certain forestry and bioenergy activities in the EU green taxonomy had already been rejected by the Commission in 2022.

The Corporate sustainability reporting directive came into effect on 16 Dec, 2022

For EU companies already required to prepare a non-financial information statement, the CSRD is effective for periods commencing on or after 1 January 2024. Large UK and other non-EU companies listed on an EU regulated market (i.e. those meeting two of the three following criteria: more than €20 million total assets, more than €40 million net turnover and more than 250 employees) will be subject to the CSRD requirements for periods commencing on or after 1 January 2025. 

UK and other non-EU companies that are not listed in the EU but which have substantial activity in the EU will be subject to the CSRD for periods commencing on or after 1 January 2028.

Finally, a very happy 2023 to all our readers.

ANTI-SUIT INJUNCTIONS: BACK IN STOCK?

On 18 November 2022, the English High Court handed down a judgment in Ebury Partners Belgium SA v Technical Touch BV [2022] EWHC 2927 (Comm) in favour of an anti-suit injunction against the Belgian proceedings breaching the English exclusive jurisdiction agreement. Mr. Justice Jacobs provided some welcome clarification and confirmation of the principles applicable upon breaches of exclusive jurisdiction agreements in the altered legal landscape post-Brexit. Indeed, the decision might be considered a continuing development following the anti-suit injunction granted by the English Commercial Court against the Spanish court proceedings in QBE Europe SA/NV and another v. Generali Espana de Seguros y Reaseguros [2022] EWHC 2062 (Comm).

A brief glimpse of the factual background

The dispute arose between Ebury Partners Belgium SA/NV (Claimant) and Technical Touch and Jan Berthels (Defendants) in April 2021 following their Relationship Agreement for foreign exchange currency services which was consented to electronically through the claimant’s website. The hyperlink attached to the box ticked by Mr. Berthels (director of the company) would have taken onto the webpage containing a pdf file with the terms and conditions of the claimant applicable to their business dealings. Indeed, Clause 27 entitled “Other important terms” included governing law and exclusive jurisdiction clauses as follows:

“[27.11] This Agreement and any dispute or claim arising out of or in connection with it or its subject matter or formation, interpretation, performance and/or termination (including non-contractual disputes or claims) shall be exclusively governed by and construed in accordance with the laws of England and Wales.

[27.12] Each party irrevocably agrees that the courts of England shall have exclusive jurisdiction to settle any dispute or claim arising out of or in connection with this Agreement or its subject matter or formation, interpretation, performance and/or termination (including non-contractual disputes or claims). For such purposes, each party irrevocably submits to the jurisdiction of the English courts and waives any objection to the exercise of such jurisdiction. Each party also irrevocably waives any objection to the recognition or enforcement in the courts of any other country of a judgment delivered by an English court exercising jurisdiction pursuant to this Clause 27.12.”

The parties further concluded a Guarantee Agreement signed by Mr. Berthels as a guarantor regarding TT’s obligations to Ebury. The latter agreement also contained English law and choice of court clauses as follows:

“[15] This guarantee and any dispute or claim arising out of or in connection with it or its subject matter or formation (including non-contractual disputes or claims) shall be governed by, and construed in accordance with, the law of England and Wales. If any provision hereof or part thereof shall be held invalid or unenforceable no other provisions hereof shall be affected and all such other provisions shall remain in full force and effect.

[16] Each party irrevocably agrees that subject as provided below, the courts of England and Wales shall have exclusive jurisdiction over any dispute or claim arising out of or in connection with this guarantee or its subject matter or formation (including non-contractual disputes or claims). Nothing in this clause shall limit the right of Ebury to take proceedings against the Guarantor in any other court of competent jurisdiction, nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdictions, whether concurrently or not, to the extent permitted by the law of such other jurisdiction.”

When TT failed to pay a margin call and further sums under their Relationship Agreement and no amicable settlement was achieved, TT brought the Belgian proceedings to seek negative declaratory relief and challenge the validity of the two agreements under Belgian law. In response to the Belgian proceedings, Ebury brought an action in England as agreed between the parties. In addition, Ebury also applied for a grant of an anti-suit injunction in breach of the exclusive jurisdiction clause.

A short recap of the judge’s legal reasoning and decision

As expressed by Mr. Justice Jacobs, the arguments brought by the parties – Ebury’s application for an anti-suit order, and the Defendants’ applications challenging the court’s jurisdiction or inviting the court not to exercise it, were pretty much different sides of the same coin.

Indeed, by considering the claimant’s application first, the judge swept away the defendant’s counter arguments. It was emphasised that, while it would not have been possible to grant an anti-suit relief upon the presence of the proceedings at an English and any other European Member State court pre-Brexit, the principles applicable upon such a request were already well-settled. In this context, the court particularly underlined Mr. Justice Foxton’s reasonings in QBE Europe SA/NV v Generali España de Seguros Y Reaseguros [2022] EWHC 2062 (Comm) at para [10]. Indeed, the judgment was based on Section 37(1) of the Senior Courts Act 1981 giving power to the court to grant an anti-suit injunction for restraining foreign proceedings when it was required by the ends of justice, therefore, was “just and convenient”, furthermore, a “high degree of probability” about the existence of a jurisdiction was established.

Being the touchstone of the reasoning, and referring to already established prior authorities, the judge rejected the defendants’ application challenging the English court’s jurisdiction and seeking a stay or a relief to that end. It was confirmed that there was a good arguable case for service out (in line with CPR 6.33 (2B) (b), also pursuant to the application of the Hague Convention on Choice of Court Agreements 2005) and the English court had exclusive jurisdiction per the agreements between the parties.  Accordingly, there were no strong reasons for the English court to decline its jurisdiction – in contrast, the court was bound to accept its jurisdiction per Article 5 of the Convention.

Significance of the judgment

This decision is of high importance for several reasons: It reiterates the emphasis that has been traditionally placed on party autonomy and authentic consent in English law and practice be it in a conventional or an electronic form by incorporation of the standard terms and conditions which would bring a useful reference point for businesses.  Indeed, the Court asserted the principles of English law regarding the dealings in e-commerce and particularly click-wrap agreements.

The judgment also reasserts the termination of the prior authorities preventing the English courts from granting anti-suit injunctions against the proceedings at the European Member State courts (re: West Tankers and Turner Grovit). Indeed, the judgment follows up the Qbe reasoning which was a grand opening of a fresh chapter for anti-suit reliefs post-Brexit. It is worth noting that the availability of such reliefs might also stimulate the European courts to issue similar orders against the English courts bringing the effects of a double-edged sword.

Last but not least, the high value of the judgment derives also from the fact that it addresses the Hague Choice of Court Agreement 2005. While there is still an unreasonable lack of relevant authorities referring to this global convention, the judgment brings hope about more case law and precedents built upon by virtue of the HCCCA 2005.