Hague Convention on Choice of Court Agreements
(Limited Text - Ministerial Extracts only)
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The Parliamentary Under-Secretary of State for Justice (Mr Shailesh Vara)
The Government have decided that the United Kingdom should opt in to the proposed Council decision on the approval, on behalf of the European Union, of the Hague convention of 30 June 2005 on choice of court agreements. The president of the Council was notified on 30 April.
The Hague convention on choice of law agreements was agreed in 2005. It will give greater legal force to choice of court agreements—that is to say, agreements made by the parties to a civil or commercial contract about their preferred dispute resolution forum in the event of a dispute.
The effect of the convention will be that courts will, in principle, have to give effect to such agreements. Similar rules are already provided in the recast Brussels I regulation (1215/2012) for intra-EU cases. The convention will, however, mean that courts in the EU will, in principle, be required to decline jurisdiction in favour of a court in a non-EU country that has been chosen by the parties. In the absence of ratification of the convention, courts in the EU would have no such obligation. If those courts accepted jurisdiction it could work against legal certainty and, in certain cases, lead to the proceedings being substantially slowed.
The convention has so far been ratified by Mexico and signed by the United States and the European Union. It is expected that more states will ratify soon.
The operation of the principle of exclusive EU external competence is such that, because of the existence of internal EU rules on jurisdiction, the EU must act collectively to give effect to this convention and a Council decision is required. Once approved, the effect of the decision will be that the convention has effect throughout the EU (with the exception of Denmark) as a matter of EU law.
The convention is likely to be of particular benefit to UK stakeholders, including those in the City of London. As a major centre for commercial business, the UK will benefit from enhanced legal certainty in relation to choice of court agreements. Commercial contracts worldwide specify with impressive frequency English common law as the applicable law, with courts in the UK chosen as the forums for resolution of any disputes. Given the benefits likely to accrue to UK interests from the convention, the Government have decided to opt in.