Shambhavi Kumar

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Introduction

Party Autonomy is a principle that states that the contracting parties to a contract should have the power to choose a choice of court and law that will apply in case of any disputes arising out of the contract itself. [1] The concept of party autonomy was ideally to give the parties to a contract complete power to choose the court they want as the court with exclusive jurisdiction, but the principle is not completely unfettered, as several domestic and international law polices the concept by narrowing the scope of the party autonomy. [2]

The Brussels Regime is a set of regulations and rules that have been established for determination of jurisdiction of courts in civil and commercial deputes in the Member states of the European Union. The Brussels I Regulation, 2001, [3] was the main document under this regime that was applicable within the European Union Member States, which at the time excluded the Kingdom of Denmark [4], from March 2002 till January of 2015. In 2005 [5], the European Community entered into an agreement with the Kingdom of Denmark for the applicability of the Brussels I Regulation, 2001 with a few amendments. This agreement was entered into to ensure application of the document within the Kingdom of Denmark, to ensure that the same rules for determining jurisdiction and enforceability of judgements in civil and commercial matters is done all throughout the European Union. In 2015, the document was replaced when the Brussels I Regulation (Recast), 2012 [6] (“Brussels Recast”) came into effect. The Brussels Recast governs all the jurisdictional conflict in commercial and civil matters across all the European Union states, including the United Kingdom as well as the Kingdom of Denmark.

The Hague Convention on Choice of Court Agreements, 2005 [7] (“HCCA”), was an international treaty came into existence after the conclusion of the Hague Convention on Private International Law. The document has been signed by eight states but has been ratified by five states, i.e. Mexico, Denmark, European Union, Singapore and Montenegro [8]. This means that the provisions of this document are enforced and are applicable only in contracts that are entered into by parties that are habitual residence of the contracting states or both the chosen and the non-chosen courts belong to a contracting party. This document states that the contracting states allow parties to a contract to consensually agree on a specific court to hold exclusive jurisdiction over any commercial or civil disputes that may arise out of the contract. This document is believed to be a litigation parallel version of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958. [9]

Brussels I Regulation (Recast), 20 December 2012

The Brussels Recast deals with the principle of party autonomy in Article 25 of the document [10]. The Article specifies the conditions under which the party autonomy can be assumed and the consecutive jurisdiction arising out of it is assumed and applied by the chosen court of the member state.  The document also differentiates between exclusive jurisdiction and party autonomy by the different Articles, i.e. Article 24 and Article 25, in any case of a dispute arising out a commercial or civil contract within the area of the European Union. 

The principle of ‘exclusive jurisdiction’ is defined in Article 24 of the document [11], which states that in certain situations, that may not be contractual in nature, only a specific court may have jurisdiction over such a matter. These situations specifically include those that deal with matters of immovable property or matters that deal with disputes that arise with respect to decisions of the Articles of Association, etc of a company or the matter concerns any entry in a public register or matters dealing with registration and validity of an intellectual property.

Under Article 25 of the Brussels Recast [12], the principle of party autonomy is introduced. In this Article, the document states that the parties can choose any court of any member state as the ‘chosen court’ that has ‘exclusive jurisdiction’ over any disputes that is to be litigated, of commercial and civil nature, arising out of the contract. In any case of application of the party autonomy, there is no requirement for the parties to show their domicile for the member state of the chosen court. This means that the chosen court, in such a case, may be completely unrelated to the contract, performance or the parties of the contract.

For example, in a contract dealing with a sale of a black Gucci bag, if the seller is a domicile of Prague and the buyer is a domicile of India, they can consensually choose the court in Amsterdam to have exclusive jurisdiction; in case the seller sends a red Gucci bag to the buyer then it is only the court at Amsterdam that can be approached with regards to such a dispute.

The Article clearly states that the contract that confers the exclusive jurisdiction is in written form or any electronic form that is the equivalent to a written form. The clause conferring the exclusive jurisdictions should be evident in the written form or with accordance to the practice established by the parties or in case of international trade it could be in commonly used trade practices. Article 25 of the document, also addresses the condition that in case the contract that chooses the court, itself, is invalid and null under the substantive domestic law of the chosen member state, then the chosen court does not have any obligation to assume jurisdiction in any such matter.

For example, in the contract mentioned in the above example, if the contract was to sell a black Gucci bag full of marijuana and assuming it is illegal to trade marijuana in the Netherlands, then the contract itself is null and invalid according to the domestic law of Amsterdam and hence the court in Amsterdam does not have to assume jurisdiction when a red Gucci bag full of marijuana is delivered instead of a black Gucci bag full of marijuana.

The Article also mentions that irrespective of any fact the chosen court should not violate the mandatory norms/rules that must be apply by the courts of countries of the parties, the chosen court cannot violate the party countries laws so as not to violate the sovereignty of the countries.

The Hague Convention on Choice of Court Agreements, 30 June 2005

The HCCA as an entire document talks about the principle of party autonomy. The treaty has several articles that determine the duties of the chosen as well as the non-chosen court, the document also talks about the situations of enforcement of the judgement as well as situations in which the enforcement of the judgement given by the chosen court can be refused by the non-chosen court.

Article 3 of the document mentions the conditions that are necessary to qualify as a concluded exclusive choice of court agreement between parties. The conditions, similar to that of the Brussels Recast, is that it needs to be in a written form or any form that can be used for subsequent reference. The article also mentions that the exclusive choice of court agreement is one that is independent of the actual contract, this means that even if the actual contract is held invalid does not mean that this exclusive choice of court agreement is invalid.

While Article 5 states that the chosen court has an obligation to assume jurisdiction in case an exclusive choice of court agreement confers such jurisdiction on it. The chosen court cannot decline the jurisdiction on the fact that another court was seized before it. This means that in case a court other than the chosen court is moved before the chosen court, the chosen court has to still hear the matter and the matter in the court moved first is suspended. Similar to the provisions of Brussels Recast, in case the contract that chooses the court, itself, is invalid and null under the substantive domestic law of the chosen member state, then the chosen court does not have any obligation to assume jurisdiction in any such matter.

For example, in case a contract is entered into for sale of a woollen cupboard, the seller is a habitual resident of Mexico and the buyer is from India and the court in Denmark is the chosen court and the decision is to be enforced in Singapore. If a steel cupboard is sent instead of a wooden one, and the buyer moves the courts in Singapore before moving the courts in Denmark and then the buyer moves the courts in Denmark. In such a case the court in Singapore has to suspend any proceedings in such a matter and the court in Denmark has to hear the matter and give a decision, post such a decision being passed the Singapore court shall dismiss the proceedings in this matter and enforce the decision as given by the Danish court.

Article 12 of the same document, that a contracting state may declare that it will not decide on disputes that have no connection between the State and the Parties or the dispute.

Article 6 of the document mentions the obligations of the non-chosen court. The article mentions that the non-chosen court is to suspend and subsequently dismiss, as seen in the above example, in case the non-chosen court is moved before the chosen court. The non-chose court can dismiss the jurisdiction of the chosen court in certain situations. As in case the contract that chooses the court, itself, is invalid and null under the substantive domestic law of the chosen member state, then the chosen court does not have any obligation to assume jurisdiction in any such matter and the non-chose court does not have to suspend and dismiss the proceedings in such a case. The non-chosen court can also assume jurisdiction in case, the any one of the parties lacked the capability to conclude the contract under the domestic law of the chosen state or the chosen court has chosen not to hear the matter or that the agreement could not be performed cause of exceptional reasons beyond the control of the parties. 

Article 8 and 9 of the HCCA state the enforceability of the decision of the chosen court. While Article 8 states that a decision given by the chosen court is enforceable in any contracting state without prejudice as if it were being enforced in the chosen state itself. Article 9 states the situations in which enforceability of such decision can be refused. The situations in which the enforcement can be refused include some of the same reasons that can be used by a non-chosen state to assume jurisdiction like when the contract is invalid under the domestic law of the chosen state and when one of the parties lacked the capacity to conclude the agreement. While some situations are similar Article 9 also mentions other grounds on which the enforceability can be refused by the non-chosen state, these include that the documents initiatng the proceedings were not notified to the defendant in sufficient time or proper manner or if the judgement was obtained by fraud or enforcement of the decision is against the public policy of the non-chosen state or if the judgement is inconsistent with an earlier judgement given by the requested state in the matter between the same parties. 

Conclusion

It is evident from the above that although the Brussels Recast talks about the concept of Party Autonomy, it is not as exhaustive as the HCCA. The HCCA is a document purely dedicated to the principle of party autonomy and hence is more comprehensive on several matters. As the two documents talk about the same principle there are several similarities with respect to provisions on a conclusive choice of court contract, enforcement of the judgement and assumption of jurisdiction by the chosen court, which is visible in the above. 

Further, as the Brussels Recast is a document that came into exitance for the solving jurisdictional disputes in the European Area, it is enforceable only in the European Area Member states, while the HCCA is an international treaty and can be ratified by any signatory and the HCCA will be enforceable in that state. 

Hence, it is of utmost important to understand that the co-existence of both these documents is necessary and beneficial for the principle and its application in practices of commercial and civil nature, as it will strengthen the international enforceability and effectiveness of such a choice of court contract making litigation on such matters a more viable option in international commercial matters, instead of arbitration. [13]

References

[1] Symeon C. Symeonides, Codifying Choice of Law Around the World: An International Comparative Analysis (Published to Oxford Scholarship Online: June 2014) 

[2] Symeon Symeonides, Party Autonomy in International Contracts and the Multiple Ways of Slicing the Apple (Article 5, Issue 3, Volume 39, Page 1129, Brooklyn Journal of International Law)

[3] Council Regulation (EC) No 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters [2001] OJ L12/1

[4] Wendy Kennett, “The Brussels I Regulation. The International and Comparative Law Quarterly” (2001) <http://www.jstor.org/stable/761719>

[5] Agreement between the European Community and the Kingdom of Denmark on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters [2005] OJ L299/62 

[6] Regulation (Eu) No 1215/2012 of the European Parliament and of the Council on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast) [2012] OJ L351/1

[7] 44 I.L.M. 1294 (2005)

[8] HCCA Website, Status Table, < https://www.hcch.net/en/instruments/conventions/status-table/?cid=98> 

[9] Kruger, Thalia. “The 20th Session of the Hague Conference: A New Choice of Court Convention and the Issue of EC Membership.” (2006) < www.jstor.org/stable/3663173> 

[10] Regulation (Eu) No 1215/2012 of the European Parliament and of the Council on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast) [2012] OJ L351/1, art 25

[11] Regulation (Eu) No 1215/2012 of the European Parliament and of the Council on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast) [2012] OJ L351/1, art 24

[12] See Id. art 25.

[13] Xandra Kramer and Erlis Themeli, The Party Autonomy Paradigm: European and Global Developments on Choice of Forum (Chapter 2)