China Desk Newsletter - 中国批准《海牙法院选择公约》- Chinese ratification of the Hague Choice of Court Convention

2017年9月12日,中国签署了《海牙法院选择公约》(“HCCC”),目前正在批准该公约。 HCCC于2005年10月1日生效,目前HCCC有33个签约国。 这些包括了几乎全部欧盟国家(仅一国例外)以及墨西哥和新加坡。 此外,乌克兰,黑山和美国已签署HCCC,但尚未批准。 On 12 September 2017 China signed the Hague Choice of Court Convention (“HCCC”), and is currently in the process of ratifying it. The HCCC entered into force 1 October 2005 and there are currently 33 contracting states to the HCCC. These include all but one of the EU states as well as Mexico and Singapore. In addition Ukraine, Montenegro and the United States have signed the HCCC, but have yet to ratify it.

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Introduction

On 12 September 2017 China signed the Hague Choice of Court Convention (“HCCC”), and is currently in the process of ratifying it. The HCCC entered into force 1 October 2005 and there are currently 33 contracting states to the HCCC. These include all but one of the EU states as well as Mexico and Singapore. In addition Ukraine, Montenegro and the United States have signed the HCCC, but have yet to ratify it.

Disputes related to international commercial contracts can basically be resolved either by arbitration or by the ordinary courts of a state. In cases where the parties do not agree on arbitration, it is not uncommon that the parties to an international commercial contract agree that disputes arising from the contract shall be settled by the ordinary courts in a specific state and by the laws of the same. In most cases at least one of the parties to the contract will be a resident of the chosen state. However in some cases the parties agree on jurisdiction for the dispute in a state where none of the parties reside, as a “neutral” ground.

The main purpose of the HCCC is to contribute to increased efficiency of such jurisdiction clauses. Once ratified by China, it can be expected that enforcement in China of foreign judgments covered by the convention will be more efficient, perhaps in line with the current practice of enforcement of foreign arbitration awards under the New York Convention of 1958, which has been ratified and practiced by China since 1987.

THE SCOPE AND PURPOSE OF THE CONVENTION

Basically, the HCCC will apply to most international commercial contracts that include an exclusive choice of court agreement or jurisdiction clause. There are however many exceptions from the scope of the convention. Consumer contracts and contracts related to carriage of people and goods are examples of contracts which are excluded from the scope of application of the HCCC.

The convention has two important functions. The first is to ensure the effectiveness of a jurisdiction clause in an international commercial contract. Article 5 (1) of the HCCC stipulates that the courts of a contracting state which is designated in an exclusive choice of court agreement “(…) shall have jurisdiction to decide a dispute to which the agreement applies.”

E.g. where the parties have agreed that disputes arising from the contractual relationship shall be resolved by the courts of China, Chinese courts must accept jurisdiction even if the case at hand have no connection to China besides the jurisdiction clause. However, a state may, according to article 19, declare that its courts may refuse to determine disputes if there is no other connection between that state and the parties or the dispute.

The second important function of the HCCC is to ensure that judgements given by a designated exclusive court of jurisdiction in a contracting state shall be recognized and enforceable in any of the other contracting states, as per article 8 of the HCCC. Thus a judgement given by a Chinese court will, after the convention is ratified, be enforceable in the other contracting states.

It is however important to be aware that enforcement in another state than where the judgement was delivered, will be subject to the enforcement regulations in said state. Many states have made certain reservations against the recognition and enforcement of foreign judgments. In Norway, for instance, the Disputes Act of 17 June 2005, section 19-16 (3) states that foreign judgments will not be recognized if this would breach mandatory rule of law or otherwise go against ordre public.

ENFORCEMENT OF SINO-NORWEGIAN CONTRACT OBLIGATIONS

Norway has no agreement with China on reciprocal recognition and enforcement of judgements. Judgments from Chinese courts will therefore not be recognized and enforced in Norway on the basis of the HCCC unless Norway also ratifies the convention. Similarly, judgments from Norwegian courts will not be recognized and enforced in China. Norway has yet to sign and ratify the convention.

In order for a Norwegian party to be able to enforce a judgement in China against a Chinese contract party, the parties must have agreed that the courts of another contracting state than China shall have exclusive jurisdiction of the commercial contract matter in question. This could for instance be any of the EU members which have ratified the convention or Singapore.

Alternatively the parties may agree on dispute resolution by arbitration, and then be able to rely on enforcement in the other country based on the New York Convention of 1958 (ratified by both China and Norway). International arbitration under the rules of the well-established venues in London, Paris, Stockholm, Singapore or Hong Kong is commonly agreed, depending on the type of contract.

Practice areas

Lawyers

Erling Christiansen
Elise Chen
Erlend W. Holstrøm
Morten Foros Krohnstad
Andreas F. Busch
Nancy Liu