International commercial litigation is about to become radically more efficient, in a major development for international businesses. On 2 July, delegates at the 22nd diplomatic session of the Hague Conference on Private International Law (HCCH) adopted the 2019 Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (the 2019 Enforcement Convention). Under the Convention, a judgment given by a court of a Contracting State (called the state of origin) shall in principle be recognized and enforced in another Contracting State (the requested state) without any review of the merits. This simple and uniform approach is a fundamental departure from current practice, in which enforcement of civil judgment is often a cumbersome and time-consuming effort, governed by varying domestic requirements often dictating a re-assessment of the entire case before a judgment can be enforced.
For this reason, the convention is heralded by the HCCH as a 'true gamechanger' in the field of international dispute resolution. The international enforcement of judgments by state court has always lagged behind the enforcement of arbitral awards. One of the major and often crucial advantages of arbitration is in the enforceability of arbitral awards in other jurisdictions under the New York Convention (1958). Until now a functional equivalent for this treaty regarding litigation did not exist. This is what the 2019 Enforcement Convention purports to change.
The 2019 Enforcement Convention applies equally to judgment that were issued on the basis of a choice of court agreement as well as the basis of other jurisdictional grounds. In that respect, the scope and effect of the Convention is substantially larger than that of its predecessor, the 2005 Hague Convention on Choice of Court Agreements, which became effective in 2015.
The success of the Convention will hinge on whether it will be ratified by a large number of states. If it will be broadly ratified, enforcement of civil judgments will no longer be a time-consuming affair with an uncertain outcome, as it currently often is. At the time of writing, Uruguay was the first state to sign the Convention, with more states expected to follow soon. The Convention will enter into force following the second ratification thereof. When successful, the Convention will indeed offer more certainty and legal security in international commerce and challenge the strong status of arbitration as the 'go-to' dispute resolution mechanism for international commercial disputes. Until such time and unless enforcement is sought within the EU, businesses that require international enforcement of their claims are well advised to opt for arbitration as a means of dispute resolution.
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