China Signs the Hague Choice of Court Convention

On 12 September 2017, the People’s Republic of China signed the Hague Convention of 30 June 2005 on Choice of Court Agreements (the Convention). This is an important development in the field of cross-border dispute resolution, which will enhance the effectiveness of exclusive choice of court agreements concluded in commercial transactions. This is the fourth in the blog’s “catch up for the new term” series.

The Convention contains an international regime for the enforcement of exclusive choice of court agreements between parties to commercial transactions, as well as for the recognition and enforcement of judgments resulting from proceedings based on such agreements. It entered into force in October 2015.

The Convention has been signed and ratified by Mexico, Singapore and the European Union (on behalf of all 28 Member States). The Convention has also been signed, but not yet ratified, by the United States of America, Ukraine and Montenegro. The UK Government may also choose to sign the Convention after it has left the European Union, as mooted in a recent Government report.

The Convention will not apply to court proceedings commenced in the PRC until it has been considered by the Standing Committee of the National People’s Congress of the PRC and then ratified by the Chairman of the PRC in accordance with the Law of the PRC on the Procedure for the Conclusion of Treaties. It is not yet clear how long this process will take.

Article 2 of the Convention contains a series of matters to which it does not apply. For example, Article 2(2)(f) provides that the Convention shall not apply to contracts for “the carriage of passengers and goods”. The Explanatory Report published by the Permanent Bureau of the Hague Conference provides the following rationale for this exclusion (at para 58):

Sub-paragraph f) excludes contracts for the national and international carriage of passengers or goods. This includes carriage by sea, land and air, or any combination of the three. The international carriage of persons or goods is subject to a number of other conventions, for example the Hague Rules on Bills of Lading. By excluding these matters, the possibility of a conflict of conventions is avoided.

It follows that the Convention will not apply to bills of lading which contain or incorporate exclusive choice of court agreements. A more difficult question is whether the exclusion in Article 2(2)(f) will also apply to charterparties which contain exclusive choice of court agreements. Since the Convention has only been in force for two years, no national court has yet considered this important question.

If the main purpose of the contract involves the carriage of goods then it seems likely that the exclusion in Article 2(2)(f) will apply. In this regard, it may be necessary to distinguish between single-voyage charters and other types of charterparties. This distinction is drawn by Regulation EC No 593/2008 on the Law Applicable to Contractual Obligations (Rome I), where single-voyage charters (and other contracts the main purpose of which involves the carriage of goods) are classified as “contracts for the carriage of goods” when determining their applicable law, but other types of charterparties are not so classified.

This issue is but one of a much wider range of issues which will arise in practice after the Convention has been ratified by the PRC. It remains to be seen whether other States will follow suit by signing and ratifying the Convention, so as to achieve for choice of court agreements the same degree of success as the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958) in the context of arbitration agreements and arbitral awards.