25 Hague Convention (Choice of Court
Agreements)
| Committee's assessment
| Legally important |
| Committee's decision | Not cleared from scrutiny; further information requested
|
| Document details | Draft Council Decision on EU approval of the Hague Convention on Choice of Court Agreements
|
| Legal base | Article 81(2) in conjunction with the first subparagraph of Article 218(6) TFEU; consent; QMV
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| Department | Ministry of Justice
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| Document number | (35776), 5445/14 + ADD 1, COM(14) 46
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Summary and Committee's conclusions
25.1 The 2005 Hague Convention on Choice of Court Agreements was
signed by the EU on 1 April 2009 on the basis of the Council Decision
2009/397/EC.[128] Its
main purpose is to increase legal certainty for parties involved
in international "business-to-business" contracts (and
thereby promote international trade) by providing uniform rules
which ensure that exclusive "choice of court" agreements
are respected and that judgments issued by designated courts can
be recognised and enforced in the courts of other Contracting
Parties.
25.2 The Convention takes precedence over the jurisdiction rules
of Brussels I[129]
(which govern choice of court agreements and recognition and enforcement
of judgments within the EU) except if both parties are EU residents
or come from third states, not Contracting Parties to the Convention.
So, should an American company and German company choose an Italian
court, the Hague Convention prevails. However, if a UK company
and German company choose an Italian court, Brussels 1 prevails.
The Convention also overrides Brussels I rules on recognition
and enforcement unless the court that delivered the judgment and
the court in which recognition and enforcement is sought are within
the EU. The Commission considers that this reduced scope of Brussels
1 is an acceptable trade-off for the increased legal certainty
and autonomy that will benefit EU companies engaged in trade with
third country parties.
25.3 The current document provides for EU approval of the Convention
which would then bind all EU Member States. The Government is
largely content with the proposed Decision and we have welcomed
this overall position given the benefits of increased legal certainty
to UK business. However, in line with the views of the UK insurance
industry, the Government has sought the inclusion in the Decision
of all insurance contracts (and not just reinsurance contracts,
as conceded by the Commission). In our last Report we therefore
asked the Government to confirm the outcome of negotiations on
the inclusion of insurance contracts as reflected in the final
text and to explain whether that final outcome was consistent
with the position in the Brussels 1 rules.
25.4 The Government has also sought to assert the UK's right to
opt into the Decision "notwithstanding exclusive external
competence on the part of the European Union"; a position
which we have found more persuasive on further consideration,
having initially questioned whether the opt-in could apply where
exclusive external competence is being exercised. In our last
Report we noted that the Government had decided to opt into the
proposal and had notified the EU of this on 30 April. We asked
the Government to continue with its efforts to ensure the transparency
of UK opt-in rights by means of appropriate wording in recitals.
The Government now responds on progress as the text is currently
being finalised for agreement by the European Parliament and final
adoption by the Council.
25.5 We thank the Minister for his letter and recognise the
efforts of his officials to achieve a text that is in UK's best
interests. We regret that, despite the Government's efforts, the
applicability of the opt-in has not been clarified in the recitals
of the Decision and that there is still an exclusion of insurance
contracts, albeit limited, from the Decision's scope.
25.6 Although we recognise the overall benefits to the UK that
adoption of the Decision will bring, including legal certainty
and consistency with Brussels 1 rules, we think it premature to
clear the document from scrutiny at this stage. We may prepared
to consider clearance (to enable the Government to support the
proposal on adoption) after the Government has updated us on the
outcome of first reading negotiations.
25.7 More immediately, we would like to hear from the Minister
as to whether, at the 9-10 October JHA Council, he voted to support
the decision to send the text to the European Parliament for its
consent and, if so, why scrutiny was overridden. In doing so,
we recognise that officials have made a conscientious effort to
keep the Committee up-to-date on the substantive issues in relation
to this document.
Full details of
the documents: Proposal
for a Council Decision on the approval on behalf of the European
Union of the Hague Convention of 30 June 2005 on Choice of Court
Agreements: (35776), 5445/14 + ADD 1, COM(14) 46.
Background and previous scrutiny
25.8 Our previous scrutiny of the current document
is set out in our Forty-fourth Report of 2013-14 and our First
Report of 2014-15.
Minister's letter of 18 September 2014
25.9 The Parliamentary Under-Secretary of State for
Justice (Mr Shailesh Vara) updates us on developments in the negotiation
of the current document and attaches the Government's impact checklist
which, he says, indicates that the document is "of overall
benefit to the UK, even if some of the benefits are difficult
to quantify".
25.10 Turning to the Commission's proposal to exclude
insurance contracts from the decision, the Minister says that
this has been the Government's "principal concern".
But the Minister explains how the Government has been able to
secure some concessions on this issue:
"the latest text makes clear that the Convention
would cover contracts for reinsurance — a key concern of
our stakeholders, who were keen for us to secure this confirmation.
Beyond that, in effect, the exclusion covers insurance contracts
which are not considered to relate to 'large risks' as defined
in the Annex — and the definitions are set out more clearly
in the latest text. The Convention itself already excludes contracts
in which one of the parties is acting as a consumer."
25.11 The Minister then adds:
"The Commission, supported by a number of
Member States, argue that the exclusion is necessary in order
to be consistent with the terms of Section 3 of the Brussels I
(recast) Regulation (1215/2012).
"A new annex has been added to the text,
the effect of which is to make explicit that the European Union
might reassess the need for such an exclusion at some stage in
the future.
"The Government would have preferred that
there should be no such exclusion. However we are clear that adoption
of the Convention overall will be in the UK's interests. This
is a view that is supported strongly by leaders in the insurance
industry and members of the Lord Chancellor's Advisory Committee
on Private International Law.
"I take the view that we are unlikely to
secure further concessions on this point and that we should compromise
by accepting the new text."
25.12 Addressing the question of the application
of the opt-in, the Minister says that although the Government
has continued to press the point:
"there is at present no support for an amendment
to recital 8. In similar cases we have sought to protect our position
by placing a minute statement on the record at Council, to the
effect that we consider that the UK's participation is secured
by the fact that we have opted in. We would propose to do the
same here if it does not prove possible to amend the text."
25.13 In terms of the steps towards adoption of the
proposal, the Minister informs us that:
"The text will now go to Coreper and to
the Council, as an 'A' point, to invite the European Parliament
to agree to the new text. I hope, therefore, that the Committee
will now be in a position to clear the text from scrutiny so that
the Government can ultimately agree to its adoption."
Previous Committee Reports
First Report HC 219-i (2014-15), chapter 18 (4 June
2014); Forty-fourth Report HC 83-xxxix (2013-14), chapter 8 (26
March 2014).
128 OJ No. L 133, 29.5.09, p 1, also available from:
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:133:0001:0013:EN:PDF. Back
129
Council Regulation No. 44/2001 of 22 December 2000 on jurisdiction
and the recognition and enforcement of judgments in civil and
commercial matters. This was recast by Regulation No. 1215/2012
of 12 December 2012 on jurisdiction and the recognition and enforcement
of judgments in civil and commercial matters. Back
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