AUSTRALIA'S ACCESSION TO THE HAGUE CONVENTION ON CHOICE OF COURT AGREEMENTS.

• Jurisdiction: Australia
• Date: 01 August 2017
• Author: Marshall, Brooke Adele

CONTENTS I Introduction II Impact of Accession to the Convention on Australian Law and Practice A Defining 'Exclusive' Jurisdiction Agreements B Jurisdiction Agreements Designating Australian Courts C Jurisdiction Agreements Designating Foreign Courts 1 Null and Void 2 Capacity 3 Manifest Injustice and Manifestly Contrary to Public Policy 4 Agreement Cannot Reasonably Be Performed 5 Chosen Court Has Decided Not to Hear the Case D Uniform Interpretation of the Convention and Australian Judicial Practice E Recognition of Judgments from Courts with Jurisdiction under an Exclusive Agreement III Matters Unresolved by the Convention and Implications for Australia's Accession A The Scope of the Convention B Matters Not Resolved by the Conventions Exceptions to Enforcement C Non-Exclusive Jurisdiction Agreements D Choice of Court Agreements that Nominate Multiple Courts E Effect of Accession on Australia's Protection of Weaker Contracting Parties IV Conclusion I INTRODUCTION

In November 2016, the Joint Standing Committee on Treaties recommended that binding treaty action be taken by Australia to accede to the Convention on Choice of Court Agreements ('Convention'). (1) The Convention aims to promote international trade and investment by providing legal certainty through the protection of commercial parties' express choices of court. (2) It seeks to achieve this aim by regularising the treatment internationally of 'exclusive' choice of court agreements and of judgments given by courts which had jurisdiction based on an exclusive agreement. Exclusive jurisdiction agreements are those which designate the jurisdiction of the courts of a single country to the exclusion of all others. They are a common feature of international contracts. When clearly drafted and regularly enforced, an exclusive jurisdiction agreement eliminates the need for parties to '[l]itigat[e] about where to litigate'. (3) The Convention entered into force in October 2015, (4) following approval by the EU, (5) on behalf of 27 of its member states, (6) and is also in force in Mexico and in Singapore. (7) The Australian government proposes to implement the Convention in a new International Civil Law Act. (8)

This article relates to the proposal to implement the Convention in Australia. It contributes to the literature (9) by appraising the central provisions of the Convention and considering how they will affect the treatment of choice of court agreements under Australian law. We contextualise this discussion by reference to important recent developments in Australian law, (10) as well as the Convention-inspired provisions in regional instruments, including the arrangements between Australia and New Zealand (11) and the EU's Brussels I Recast Regulation. (12) The impact of the Convention in Australia may foreshadow changes to the law of other common law countries that ratify the Convention.

Subject to the following comments about the way in which the Convention is implemented in Australian law, we support Australia's accession to the Convention. Part II critically analyses Australia's proposal for the Conventions implementation and notes the mostly positive impact the Convention will have on Australian law and practice. Part III considers several shortcomings of the Convention and the proposal for its implementation in Australia--recommending refinements--and scrutinises the Convention's broader impact on Australian law. Part IV is a conclusion.

II IMPACT OF ACCESSION TO THE CONVENTION ON AUSTRALIAN LAW AND PRACTICE

With the exception of choice of court agreements in trans-Tasman cases (13) and in intra-Australian cases, (14) the common law currently governs the effect of all choice of court agreements in Australia. Australia's accession to the Convention will change the treatment of exclusive jurisdiction agreements designating the courts of contracting states to the Convention, including Australian courts. In section A of this part, we consider the positive effect that accession will have on the characterisation of a jurisdiction agreement as exclusive or nonexclusive under Australian law. Section B considers the impact that the Convention will have on the discretionary treatment by Australian courts of exclusive jurisdiction clauses nominating Australian courts. Section C analyses the major improvement the Convention will make to Australian law, which is the improvement in the enforcement of exclusive jurisdiction agreements nominating foreign courts. Section D is an assessment of how a uniform approach to interpretation of the Convention is likely to impact Australian judicial practice. Section E closes with the effect of the Convention on the treatment by Australian courts of judgments given by a foreign court, the jurisdiction of which derives from an exclusive choice of court agreement.

A Defining 'Exclusive' Jurisdiction Agreements

One of the important changes that the Convention will make to Australian law is through its definition of an exclusive jurisdiction agreement. The characterisation of a jurisdiction agreement as exclusive or non-exclusive determines what effect will be given to that agreement: particularly, whether a court will stay proceedings given the existence of the agreement. (15) At common law, exclusive agreements require parties to litigate, if at all, in and to submit to the jurisdiction of the nominated court to the exclusion of all other competent courts. (16) Such an agreement may be enforced by staying proceedings brought in breach of the agreement, by an anti-suit injunction to prevent proceedings being commenced or continued in breach of the agreement, and by the award of damages for breach of the agreement. Non-exclusive jurisdiction agreements indicate the parties' submission to the jurisdiction of the nominated court, but also preserve their rights to bring proceedings in any competent courts. (17) The effect of a jurisdiction agreement also depends on which court is considering the agreement. In the case of an agreement which nominates the forum court, the issue is whether the court should retain jurisdiction because of the agreement or stay proceedings notwithstanding it. In the case of an agreement which nominates a foreign court, the question is whether the forum court should stay proceedings because of the agreement or retain jurisdiction notwithstanding the agreement.

The Australian test for whether a jurisdiction agreement is exclusive, rather than non-exclusive, is whether it obliges the parties to litigate in the nominated courts, (18) which is a question of interpretation. (19) There is usually no evidence as to the parties' subjective intentions, and therefore the agreement must be interpreted by reference to objective factors which are assumed to indicate the intentions of reasonable contracting parties. (20) These include whether the parties explicitly designated the jurisdiction of the nominated court as 'exclusive' or 'non-exclusive', (21) the use of mandatory language such as 'shall' and 'must' and whether the clause refers to 'all' or 'any' disputes. (22) Whether the nominated court would have been competent according to its own rules without the parties' choice of court is treated as a factor indicating exclusivity, because the agreement would otherwise be redundant. (23) A further factor to consider is whether the agreement is intransitive or transitive: whether the parties have agreed only to submit themselves or also to submit their disputes to the nominated court. (24) By submitting themselves, parties are agreeing to defend in the nominated court if sued there, with the implication that they are free to initiate proceedings elsewhere, which suggests that the clause is non-exclusive. By submitting their disputes, parties are agreeing to initiate and defend eventual proceedings in the nominated court which suggests that the clause is exclusive.

These factors often do not indicate with certainty whether the clause will be interpreted as exclusive or not. (25) The lack of certainty in the process of interpretation is prone to be exploited: given that there is usually no evidence of the parties' actual intentions at the time of making the contract, each party is likely to adduce factors in support of an interpretation most favourable to them at the time a dispute arises. (26) This lack of certainty impedes settlement and makes litigation on this preliminary point likely. In finely balanced cases, courts may be inclined to find agreements nominating the forum court to be exclusive and agreements nominating foreign courts to be non-exclusive, which may encourage forum shopping.

The Conventions definition of an exclusive choice of court agreement is functionally similar to that which applies at common law. Under the Convention, an exclusive choice of court agreement is one which 'designates ... the courts of one Contracting State ... to the exclusion of the jurisdiction of any other courts'. (27) The Convention differs from the common law by deeming a jurisdiction agreement to be exclusive, unless the parties 'expressly provided otherwise', (28) in which case it will be non-exclusive and outside the scope of the Convention. (29) The presumption of exclusivity also features in several regional European instruments governing choice of court. (30) In contrast, the common law does not presume exclusivity; indeed, the parties' failure to explicitly characterise jurisdiction as 'exclusive' is at common law relevant to whether the agreement is interpreted as exclusive. It has been suggested that a presumption of exclusivity would improve the Australian law by simplifying the law and encouraging more explicit drafting. (31) This would reduce the scope for parties to exploit uncertainties in the jurisdiction agreement when a dispute arises, (32) which should, in turn, facilitate settlement and reduce the costs of litigation if settlement is unsuccessful.

The Trans-Tasman Proceedings Act 2010...