Introduction

9.1 This chapter discusses a third factor that influences the scope of Australian remedies: treaties, conventions and other international agreements and arrangements relating to civil procedure. The chapter outlines the current international agreements to which Australia is a party that deal with service or enforcement issues. It also discusses other international agreements to which Australia is not a party but which are relevant to the issue of service and enforcement extraterritorially. Finally, the chapter briefly considers current initiatives and proposals in the areas of service and enforcement, and the possible benefits for Australian litigants if such agreements came into force with Australia as a party.

International agreements involving Australia

Introduction

9.2 Australia is not currently a party to any multilateral convention regarding reciprocity of enforcement of court judgments or service of court documents. Australia does however have bilateral agreements with a number of countries relating to service of documents, and Australia has reciprocal arrangements for the enforcement of judgments with a number of countries. These have been briefly referred to in chapter 6 and are discussed in more detail below.

Service of process - UK treaties

9.3 Australia is a party to a number of treaties entered into by the United Kingdom and certain European countries in the 1920s and 1930s.[dcxvii] These treaties set out an agreed procedure for service of documents and the taking of evidence in civil and commercial matters for each relevant jurisdiction. In relation to international service of documents in civil and commercial matters the general provisions of the treaties are as follows

  • Documents may be served on a person within the jurisdiction of the foreign Contracting Party, regardless of that person's nationality, in accordance with the procedures set out in the treaty.

  • A Consular Officer' of the Contracting Party seeking service must request a Competent Authority' (as defined in the treaty) of the Contracting Party in which service is required, to cause the documents to be served.

  • The request for service must be in the language of the Contracting Party in which the documents are to be served, and must state certain information including the full name and address of the party to be served.

  • The documents to be served must be in duplicate and must be either in the language of the Contracting Party in which service is to take place or be accompanied by a certified translation into such language.

  • Actual service of the documents is to be accomplished by the Competent Authority of the Contracting Party in which the documents are to be served and where a special manner of service is requested of that Competent Authority that manner of service is to be followed in so far as it is not incompatible with the law of that Contracting Party.

  • Service in accordance with a request is not required to be undertaken where the relevant sovereign of the Contracting Party in which service is to take place considers that such service would compromise its sovereignty or safety.

  • The Competent Authority attempting to perform the execution of service in the jurisdiction of the Contracting Party in which service is to take place must provide a certificate proving the service or explaining why service was prevented and setting out the manner in which service was attempted or completed.

9.4 The Rules of the Federal Court of Australia and the New South Wales Supreme Court Rules outlined in chapter 6 closely follow these requirements where a party is seeking assisted service in a country with which Australia has such a treaty. The rules in each court however have a further requirement that the court also provide a letter of request for forwarding by the Attorney General to the relevant Competent Authority in the foreign Contracting Party. This is not required under any of the relevant treaties themselves.

9.5 Where service is required in a country with which Australia does not have a treaty service may still be possible. It is common for Australia to effect service for parties from non-contracting countries or for non-contracting countries to effect service for Australian parties. Requests for service must go through the Attorney General.

9.6 As these treaties relate only to service of legal documentation and not enforcement of judgments there are no immediate effects on the ability of an Australian litigant to obtain a particular remedy against a defendant in a foreign jurisdiction. However, by providing an official channel for service of documents these treaties, and the rules of Australian courts giving effect to them, do offer assistance to Australian plaintiffs in commencing and conducting proceedings. It is understood however that these official channels are perceived to be slow. This tends to devalue the benefit of the treaties, especially in cases where there is some urgency in serving the documents on the foreign defendant.

Other agreements concerning service

9.7 There is one other international agreement offering some assistance to Australian litigants in relation to service of legal documents. Australia is a party to the Vienna Convention on Consular Relations signed on April 24, 1963. This Convention was ratified by Australia on February 12, 1973 and came into force on March 14, 1973.[dcxviii]

9.8 Article 5(j) of the Vienna Convention identifies one consular function as transmitting judicial and extra judicial documents or executing letters rogatory or commissions to take evidence for the courts of the sending State in accordance with international agreements in force, or in the absence of such international agreements, in any other manner compatible with the laws and regulations of the receiving State'. This contemplates two consular actions

  • direct consular action whereby the consular officer effects service of the documents directly on a party in the foreign jurisdiction

  • indirect consular action whereby the consular officer transmits the documents for service to an appropriate authority in the foreign jurisdiction for service to be effected by that authority.

In some foreign jurisdictions service in either manner is permitted only in respect of an addressee who is a national of the country seeking service.

9.9 This provides one further avenue that an Australian party may consider using for service of legal documentation in a foreign jurisdiction but has no benefit in relation to enforcement of Australian judgments in foreign jurisdictions.

Reciprocal recognition of judgments

9.10 As discussed in chapter 6 the Foreign Judgments Act sets out a framework for recognition of foreign judgments in Australia on the basis of reciprocal recognition of Australian judgments in those foreign jurisdictions. The operation of the Act is based on agreements between Australia and the relevant foreign jurisdictions and is supported by a series of regulations.[dcxix] In summary, the Act provides a framework for enforcement of foreign money judgments in Australia based on assurances that the foreign jurisdictions to which the Act applies will substantially reciprocate in the enforcement of judgments of the Australian Supreme and Federal Courts.[dcxx] If the Act is not proclaimed to apply to a particular foreign jurisdiction then enforcement of a money judgment of a foreign court in Australia is to be conducted at common law, requiring the judgment debtor to be served in or having submitted to the jurisdiction of the enforcing court in Australia.

9.11 It is important to note that the number of countries included on this basis is limited in scope and that a number of important jurisdictions and trading partners of Australia are not included.[dcxxi]

9.12 The Foreign Judgments Act can offer significant assistance to an Australian party seeking to recover on the basis of enforcement of a judgment in a foreign jurisdiction. That is, it permits that party to take the judgment of the relevant Australian court directly to the relevant foreign jurisdiction and obtain enforcement on the basis of suitable remedies permitted within that foreign jurisdiction. There is no need for that party to take fresh proceedings in that foreign jurisdiction. The Australian party merely follows the procedure set out for registration of the judgment. The main limitation to this form of assistance to Australian parties is the limited number of countries with which Australia has this reciprocal enforcement arrangement.

9.13 The treaties relating to service and the bilateral arrangements for recognition of judgments are the major part of Australia's extraterritorial arrangements in relation to service and enforcement.

UK agreement on recognition of judgments

9.14 Australia has one other separate agreement regarding reciprocity of recognition and enforcement of judgments from a foreign jurisdiction. On 23 August 1990 Australia and the United Kingdom entered into an agreement providing for reciprocal recognition and enforcement of civil and commercial judgments.[dcxxii] The agreement contains an undertaking by the United Kingdom to enforce money judgments and arbitration awards (other than matters in respect of taxation and maintenance) of the Federal, Supreme and District Courts of Australia. This agreement entered into force on the exchange of Notes at London on 1 September 1994.

9.15 Pursuant to Article 3(1) of the agreement the British government also undertakes not to recognise or enforce judgments given against defendants domiciled in Australia by courts of the Contracting States to the Brussels/Lugano/San Sebastian Conventions exercising exorbitant jurisdiction. This is an important protection for Australian parties. This is a particularly important agreement to have with the United Kingdom because of the economic and political relationships which Australia shares with the United Kingdom. The effect of the Brussels/Lugano/San Sebastian Conventions and exorbitant jurisdiction of Contracting States on Australia is discussed below.

9.16 Provision is also made for the reciprocal enforcement of judgments for the recovery (clawback) of sums paid in respect of a judgment of a court of a third country involving an exorbitant exercise of its jurisdiction in antitrust proceedings or in proceedings for an award of multiple damages.[dcxxiii]

9.17 This agreement with the UK bolsters the existing arrangements for the enforcement of judgments of Australian courts in the United Kingdom, to the advantage of Australian plaintiffs.

Taking evidence abroad

9.18 Australia acceded to the Hague Evidence Convention on 23 October 1992.[dcxxiv] The Convention allows for the examination of witnesses and the production of evidence in other Contracting States. Measures of compulsion in the Contracting State are used to secure the evidence, which is subject to any rules of privilege that exist in Australia or the Contracting State.

Arbitration

9.19 International arbitration is arguably the area of procedure with the most comprehensive coverage in international commercial law. There are a number of major arbitration treaties and agreements in place. They are discussed in chapter 11.

Brussels Convention (1968)

9.20 There are several important multilateral agreements regarding extra-territorial service and enforcement of foreign judgments to which Australia is not a party. These include the related Brussels/Lugano/San Sebastian Conventions, the Hague Service Convention, the Hague Foreign Judgments Convention and the European Convention on Bankruptcy.

9.21 The Brussels Convention was signed by the six original member States of the European Union on September 27, 1968. The Brussels Convention is also operative in each new member State of the European Union. Membership is restricted to European Union members only. It is relevant to Australia in two ways: it has implications for Australian firms trading or investing in Europe, and it has been used as the model for the Lugano Convention which is not restricted to European members only.

Main principles

9.22 The basis of the Brussels Convention is one of mutual recognition of civil and commercial judgments of Contracting States without any special procedure being required.[dcxxv] The presumption in favour of recognition can only be rebutted in limited circumstances, for example where recognition would be contrary to public policy.[dcxxvi] The Convention does not apply to bankruptcy, winding-up and analogous proceedings.[dcxxvii] Even cases that flow directly from a bankruptcy or winding-up are not covered by the Convention.[dcxxviii]

9.23 Where a party is sued by any interested party within a Contracting State in relation to any of the specific grounds referred to in the Convention, the judgment resulting from the hearing of the matter is able to be readily recognised and enforced in any other Contracting State.[dcxxix] The Contracting State in which enforcement is sought may not apply local rules to determine whether the judgment may be enforced and may not review the substance of the case. In other words, the judgment is prima facie enforceable if

  • it emanates from another Contracting State

  • is in one of the categories that are the subject of the Convention, and

  • does not fall within the limited exemption categories.

9.24 The overriding tenet of the Brussels Convention is that persons domiciled' in a Contracting State shall, whatever their nationality, be sued in that state.[dcxxx] However, in certain circumstances the Convention permits a defendant 'domiciled' in one Contracting State to be sued in another Contracting State. In relation to the examples in chapters 7 and 8, these circumstances are as follows

  • contractual dispute - the court in the Contracting State where performance of the obligation forming the basis of the relevant legal proceedings was to take place has jurisdiction

  • tortious matters - the court in the Contracting State where the harmful event occurred has jurisdiction

  • disputes arising out of operations of a branch, agency or subsidiary in a Contracting State - the court in the Contracting State where the branch or agency is located has jurisdiction to hear the matter

  • disputes involving immovable property and (generally) tenancies of immovable property - the court in the Contracting State in which the property is situated

  • disputes involving the validity of the constitution, dissolution of companies or other legal associations or the decisions of their organs - the court of the Contracting State in which the company is seated.

Areas of overlapping jurisdiction

9.25 This automatic assumption of jurisdiction clearly has potential for conflict with the assumption of jurisdiction by courts of states that are not party to the Brussels Convention. For example, Australian courts will assume jurisdiction over a tortious matter if damage is suffered in Australia, notwithstanding the fact that the harmful event occurred outside the jurisdiction.[dcxxxvi] This conflicts with the Brussels Convention's provisions on tortious matters.

9.26 The Brussels Convention's provisions on immovable property present particular concerns as they dispense with the requirement that the defendant be in the Contracting State or indeed in any Contracting State. The court of the Contracting State in which the immovable property is located has jurisdiction with respect to that property. It has been held that this provision does not just cover claims relating to title to such property but also any proceedings relating to that property, including actions for rent.[dcxxxvii]

9.27 As a result of these rules, and the possibility of these triggering events occurring in a number of Contracting States in relation to the same matter, more than one court may have jurisdiction to hear the matter.[dcxxxviii] Except in the case of immovable property, a plaintiff may then sue in an appropriate Contracting State of its choice and, relying on Article 26 of the Convention, seek enforcement in any other Contracting State.

Implications for Australia

9.28 There are some significant adverse consequences for a country such as Australia in not being able to become a Contracting State to the Brussels Convention. Most importantly, once a judgment is delivered in one Contracting State against a defendant resident in Australia the judgment is recognised and enforceable in all other Contracting States.[dcxxxix] If the Australian defendant has assets in one member country and a judgment is entered against it in another member country the judgment may easily be enforced against those assets in the other member country.

9.29 The one possible exception to this may lie in Article 27(5) of the Convention. This Article prevents a Contracting State from recognising a judgment from another Contracting State where that judgment is irreconcilable with the judgment of a non-Contracting State and the parties and the cause of action are exactly the same. Thus if an Australian court judgment is inconsistent with the judgment of a Contracting State, on the same cause of action and with the same parties, the judgment in the Contracting State will not be enforceable in any other Contracting State.

9.30 There are other important issues of concern for Australian litigants, particularly Australian defendants. If a judgment of a court of a non-Contracting State, for example Australia, is recognised in a court of any Contracting State, for example the United Kingdom, there is potential for this judgment to be immediately recognised throughout all member States. This interpretation relies on the assumption that the decision by the court in the Contracting State (in this case, the United Kingdom) to recognise the non-member judgment constitutes a 'judgment' for the purposes of Article 25 of the Convention, making the provisions of the Convention apply.[dcxl] This conclusion is not settled either way and is the subject of much controversy. However on the face of the wording in Article 25 it would appear that this interpretation is strongly arguable.[dcxli]

9.31 There are further implications for Australian defendants as a result of the treatment of 'exorbitant' jurisdiction of Contracting States' courts under the Brussels Convention. 'Exorbitant' jurisdiction means an exercise of jurisdiction which extends beyond the traditional categories of jurisdiction recognized by all States. This type of jurisdiction is found where the domestic law of a country contains assumptions of jurisdiction in circumstances that are not usually recognised in the jurisdictions of other countries.[dcxlii] Most Contracting States to the Convention have such laws.

9.32 While these laws as identified in the Convention are prohibited between member States,[dcxliii] they still operate in respect of non-member States and within the relevant Contracting State itself. Thus once a judgment based on 'exorbitant' jurisdiction has been made against a party in a non-Contracting State by a court in a Contracting State this judgment is given effect across all Contracting States by way of Article 26 of the Convention. In effect this is recognition of an 'exorbitant' jurisdiction of one Contracting State by all other member States where previously there would have been no such recognition by these other Contracting States. This should raise concerns for defendants located in non-Contracting States such as Australia who are now made significantly more vulnerable in relation to their interests in Europe than was previously the case, although as at 1994 no application of 'exorbitant' jurisdiction in this manner has been made against an Australian defendant.[dcxliv]

9.33 Non-Contracting States may be able to obtain some relief for defendants within their jurisdiction from the effects of the Convention, especially the 'exorbitant' jurisdiction effects, by negotiating bilateral agreements with Contracting States. Article 59 of the Convention permits a Contracting State to enter into an agreement which refuses to recognise any 'exorbitant' judgments given in other Contracting States against defendants from the non-Contracting States. One such example is the Agreement providing for reciprocal enforcement between Australia and the United Kingdom.[dcxlv] In Article 3(1) of this Agreement the British government has undertaken not to recognise or enforce judgments given against Australian defendants by courts of the Contracting States to the Convention where those courts are exercising 'exorbitant' jurisdiction. This agreement has been in force since September 1, 1994.

Potential benefits

9.34 Despite the problems for Australian litigants as a result of Australia not being a Contracting State to the Brussels Convention, there is potential for some benefit to Australian plaintiffs as a consequence of the results outlined above. This would appear to be the case where the defendant located in a Contracting State to the Convention has assets in other Contracting States. By obtaining a judgment in, or recognition of an Australian court judgment by, the court of a Contracting State the Australian plaintiff might obtain immediate enforcement rights in relation to assets located in all other Contracting States. In the case of recognition of a judgment of an Australian court this will depend on the interpretation afforded the word 'judgment' in Article 25 of the Convention and whether recognition of a judgment of an Australian court by a court of a Contracting State is taken to be a 'judgment' enforceable in other Contracting States for the purposes of the Convention.

Mareva injunctions and other protective remedies

9.35 A further area of interest to Australian litigants is the provisions in the Brussels Convention relating to prior protective remedies, including Mareva injunctions.[dcxlvi] The Convention permits a party to apply to the court of a Contracting State for protective measures available under the law of that State even if the courts of another Contracting State have jurisdiction as to the substance of the matter to which the protective measures relate and no proceedings of the case have been commenced in the Contracting State in which the Mareva injunction is sought.[dcxlvii]

9.36 At common law Mareva injunctions are only granted where the proceedings to obtain such a protective remedy relate to a wider cause of action in the jurisdiction.[dcxlviii] A Mareva injunction could not traditionally be granted in the local jurisdiction in relation to proceedings in another foreign jurisdiction. Under Article 24 of the Convention this position has been reversed so that prior protective measures can be obtained in one Contracting State in relation to proceedings in another Contracting State. As England and Ireland are both Contracting States to the Convention it is possible that this will have some effect on Australian law with respect to Mareva injunctions.[dcxlix] This may also have consequences for Australian litigants seeking to obtain Mareva injunctions in various parts of Europe. For example, by commencing an action in one Contracting State, Mareva injunctions may be obtained in other Contracting States notwithstanding that no proceedings have been commenced in those States.

Service of process

9.37 The Brussels Convention also has relaxed provisions relating to the service of documents between Contracting States. Article IV of the Protocol annexed to the Convention provides for service through the use of process servers of the Contracting States.[dcl] Under the Protocol the process server of the requesting State may turn directly to the process server of the State where service is sought, thereby bypassing any formal requirements to conduct service through official consular or government channels. In the case of a document to be served in a Contracting State that has no treaty in respect of service with the forum Contracting State, the law of the forum Contracting State applies. This presents opportunities for Australian plaintiffs. For example, where it is possible, Australian plaintiffs could consider the commencement of proceedings in a Contracting State to make service in another Contracting State much easier than if an action is run only in Australia and service is sought out of Australia.

Advantages and disadvantages of membership

9.38 Evidently this kind of Convention is one from which Australia would receive a number of benefits if it were able to and did become a party. It would mean that none of the Western European jurisdictions that are Contracting States could exercise 'exorbitant' jurisdiction in relation to Australian defendants. Additionally, if Australia were to become a Contracting State Australian plaintiffs would be able to obtain protective remedies such as Mareva injunctions in other Contracting State jurisdictions without the need to commence proceedings in that Contracting State in relation to the main matter in dispute.

9.39 The advantages or disadvantages to Australian litigants in the predetermined jurisdiction categories under the Brussels Convention would depend on the facts of the specific action. For example, in contract disputes Australian courts would no longer be able to claim jurisdiction on the basis that the contract was made in Australia because the governing criterion for jurisdiction under the Convention is the place where the performance of the obligation forming the basis of the action was to take place.

9.40 The principal disadvantage to being a party to a convention like the Brussels Convention, however, would be the ease with which European plaintiffs could access Australian defendants domiciled and assets located in Australia. This needs to be considered in the context of and in the light of the number of Contracting States with which Australia has reciprocal enforcement of judgment arrangements under the Foreign Judgments Act.[dcli]

9.41 As noted above, a state may only become a Contracting State to the Brussels Convention upon joining the European Union which clearly precludes Australia. However, the Lugano Convention does not have such a geographic or economic zone restriction to becoming a party and is almost in exactly the same terms as the Brussels Convention. There are also proposals for the creation of a convention in similar terms but with a much wider membership.[dclii]

Lugano Convention (1988) and San Sebastian Convention (1989)

9.42 The Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters done at Lugano (Lugano Convention) was signed on 16 September 1988. This Convention together with the San Sebastian Convention of 1989[dcliii] effectively extends the regime established by the Brussels Convention to the whole of Western Europe. The comments made in relation to the Brussels Convention therefore largely apply to these conventions as well.

9.43 The most important attribute of the Lugano Convention is that unlike the Brussels Convention the Lugano Convention can be acceded to by any other State with consent of the original signatories, being all of the European Union and the European Free Trade Association States, and the unanimous agreement of all existing parties.[dcliv]

9.44 As indicated in the outline above of the principles applying under the Brussels and Lugano Conventions, there may be advantages for Australia in becoming a party to the Lugano Convention. There would also be some disadvantages. It is possible for Australia to become a party to this Convention but this is likely to be politically difficult given the level of approval required by the existing members. Current discussion in the Hague Conference on Private International Law in regard to a worldwide convention on mutual reciprocity of recognition of judgments (which has used the Lugano Convention as a model) may be a more productive approach. Nonetheless, as the Hague Conference deliberations are likely to take some time, it would be useful to consider whether there is any realistic possibility of Australia becoming a party to the Lugano Convention.

Other international agreements and arrangements

Hague Service Convention (1965)

9.45 The Hague Convention on the Service Abroad of Judicial and Extra-judicial Documents in Civil and Commercial Matters (Hague Service Convention) was entered into on November 15, 1965 and has twenty six Contracting States, including the United States and the United Kingdom.[dclv] Australia is not a Contracting State.

9.46 A number of conditions must be met before the Hague Service Convention can apply between Contracting States

  • the matter must be civil or commercial

  • the address of the person to be served must be known and

  • the service of a writ must take place from one Contracting State to another Contracting State.

On satisfaction of these conditions attempts at service will be effected via a certain Central Authority appointed by each of the Contracting States.[dclvi] The Central Authority or other authorised officer of the Contracting State seeking service requests the Central Authority of the Contracting State in which service is sought to effect service of the addressee at the nominated address.[dclvii] After service is effected or has been attempted but is unable to be completed, the Central Authority of the Contracting State in which service was to take place must provide a standard certificate supplying details of the service or inability to serve.[dclviii]

9.47 The Hague Service Convention also permits an alternative method of service to be conducted by diplomatic officers of the nation from which the documents for service originate. However any Contracting State may bar service in this manner except where service is to exercised on a national of the Contracting State from which the documents originate.[dclix] Consular channels and, in exceptional circumstances, diplomatic channels may be used to transmit requests and documents for service to the relevant Central Authority.[dclx]

9.48 The Hague Service Convention requires that documents served under the regime be written in either French or English.[dclxi] There is no requirement that the documents to be served be written in or be accompanied by a translation into the official language of the Contracting Party in which service is to be conducted. Depending on the jurisdiction, there are concerns that service in this manner represents substantial injustice and fails to allow due process in non-French speaking and non-English speaking Contracting States and may be set aside on this basis. Most Contracting States have indicated that their relevant Central Authorities will not conduct service unless there is a translation into the national language of the country.[dclxii] In any case many of the Contracting States have bilateral agreements between themselves that require a translation to be part of any documentation served within the jurisdiction.

9.49 From an Australian perspective the Hague Service Convention has the advantages that

  • it almost exactly replicates the existing Federal Court Rules, the New South Wales Supreme Court Rules and the bilateral treaties on service discussed in chapter 2 to which Australia is already a party

  • it permits service by consular officials of the Contracting State requesting service in the jurisdiction of the Contracting State in which service is to take place in the same way as Australia has already agreed pursuant to the Vienna Convention on Consular Relations 1963

  • there is no requirement that the court give a letter of request, as under the current Federal Court Rules and New South Wales Supreme Court Rules

  • there are a number of important Contracting States to this Convention with which Australia does not have bilateral agreements in relation to extra-jurisdictional service of legal documents.

Hague Foreign Judgments Convention (1971)

9.50 The Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters (Hague Foreign Judgments Convention) was entered into on February 1, 1971 and is in force only in the Netherlands, Cyprus and Portugal. This Convention does not create rights in favour of parties in Contracting States but acts as a guideline for bilateral enforcement agreements between Contracting States.

9.51 Essentially, the Hague Foreign Judgments Convention provides for conditions in which foreign judgments (from other Contracting States) should be recognised and does not specify the circumstances in which the courts of a Contracting State can exercise jurisdiction over foreign defendants.[dclxiv] It lists a number of 'exorbitant' jurisdictions that may not be taken from one Contracting State and enforced in another Contracting State, in much the same way as the Brussels/Lugano/San Sebastian Conventions. Like the Brussels/Lugano/San Sebastian Conventions this does not prevent a Contracting State from actually exercising this 'exorbitant' jurisdiction per se and enforcement of an 'exorbitant' judgment within that Contracting State and outside the other Contracting States under the Convention is still acceptable.[dclxv]

European Convention on Bankruptcy (1990)

9.52 There are currently no comprehensive multilateral international agreements in respect of bankruptcies. The lack of progress in this area appears to be attributable to the reluctance of any state to hand over international bankruptcy matters in relation to their respective jurisdictions and in which their own citizens are involved for determination by foreign jurisdictions.

9.53 The Council of Europe Convention (European Convention on Certain Aspects of Bankruptcy) was signed on June 5, 1990.[dclxvi] This Convention grants the country where the insolvent party has the 'centre of its main interests' jurisdiction to make arrangements for the bankruptcy.[dclxvii] The trustee in bankruptcy in that jurisdiction has powers to access the bankrupt's assets in any Contracting State without the need for recognition of the trustee's authority in each of the relevant Contracting States. Notwithstanding this the trustee must act in accordance with the local law of the Contracting State in relation to the particular asset.

Hague Conference initiatives

9.54 A number of international bodies are currently working on models for multilateral conventions on civil procedure. This section discusses two recent initiatives

  • the work of the Hague Conference on Private International Law concerning the recognition and enforcement of judgments in civil and commercial matters

  • the proposals being considered by the International Law Association (ILA) Committee on International Civil and Commercial Litigation.

9.55 The 17th Session of the Hague Conference on Private International Law convened a Special Commission (Hague Special Commission) to investigate the possibility of development of a Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters. This Commission met in the Hague in June 1994 and discussed, among other matters, the possibility of developing a regime based on the Brussels and Lugano Conventions.[dclxviii] The Hague Special Commission is not yet dedicated to drafting a convention and no convention has been proposed at this stage.

Mechanisms for mutual recognition

9.56 The possibility of bringing in new Contracting States to the Brussels/Lugano Conventions was considered by the Commission but it was acknowledged that they were designed to be used in relation to a localised group of states seeking closer economic co-operation.[dclxix] Consequently application on a worldwide basis was not feasible without significant amendment.

9.57 The Hague Special Commission has reached the conclusion that any such Convention extending a mutual recognition regime outside Europe should have a structure similar to the Brussels/Lugano Conventions. The regime should specify

  • the circumstances which national courts of Contracting States can exercise jurisdiction over defendants in other Contracting States, and

  • provide for the conditions in which judgments of one Contracting State will be recognised in other Contracting States.

In considering a possible form of such a convention it has been largely agreed that certain areas such as insolvency and bankruptcy should not be brought under the regime and should be made the subject of separate agreement.

Principles governing mutual recognition

9.58 The Hague Special Commission otherwise considered that in general the jurisdiction of Contracting States to hear matters with elements in other Contracting States should be determined in accordance with the determinants of jurisdiction used in the Brussels/Lugano Conventions.[dclxxi] The following outlines the relevant conclusions of the Hague Special Commission on jurisdiction between Contracting States as they relate to the legal proceedings for the examples in chapters 7 and 8.

(a)      Where jurisdiction cannot be founded on any of the other agreed categories for determination of jurisdiction in the Convention, a plaintiff must commence its action in the jurisdiction of domicile of habitual residence of the defendant. This is the same as Article 2 of the Brussels/Lugano Conventions.

(b)     Matters relating to immovable property should usually be heard in the jurisdiction where the property is located. This is the same as Article 16(1) of the Brussels/Lugano Conventions.

(c)      There should be a provision in the finally settled Convention allowing a court to assume jurisdiction as a result of a specified connection with a contract where a dispute arises. This might for example be the place for performance as in the case of Article 5(1) of the Brussels/Lugano Conventions.

(d)     Jurisdiction should be granted to the court in the place a transaction is entered into (akin to the place of business) by a corporation, association or individual. This is the same as Article 5(5) of the Brussels/Lugano Conventions.

(e)      A jurisdiction should be granted in tort but the Hague Special Commission is not settled as to the basis on which it should be granted. The Brussels/Lugano Conventions Article 5(3) as interpreted in Bier BV v Mines de potasse d'Alsace[dclxxii] grants jurisdiction to a court of the place where the act causing harm occurs or in the place where the harm is suffered. It was left open whether this should be more narrowly defined.[dclxxiii]

(f)      Counter-claims should be heard in the court having jurisdiction over the plaintiff's claim. This is similar to Article 6(3) of the Brussels/Lugano/San Sebastian Conventions.

(g)     The parties may agree as to which forum will be applicable. This follows Article 17 of the Brussels/Lugano Conventions.

(h)     The final form of the convention should contain restrictions on the application of certain 'exorbitant' jurisdictions. Restrictions relevant to the examples in chapters 7 and 8 include: no automatic jurisdiction to hear a matter if the defendant has property in the jurisdiction; no automatic jurisdiction on the basis of temporary presence of the defendant in the jurisdiction at the time of service of the initiating writ; and the possibility of classing the attachment of jurisdiction to the occasional acts of doing business in the forum as being exorbitant. This largely replicates the position in the Brussels/Lugano Conventions.

(i)      There should be a list of exceptions or defences to the automatic enforcement of judgments from other Contracting States similar to Article 27 of the Brussels/Lugano Conventions but this list should be extended to include situations of fraud.

(j)      There should be an ultimate decision maker on issues relating to the Convention in much the same way that the European Court of Justice is the ultimate decision maker on the Brussels Convention.

Prospects for agreement

9.59 The Hague Special Commission has noted that there will be some difficulty in getting all potential Contracting States to agree to the exact rules of the regime. This is largely because many countries will not be willing to give up jurisdiction to hear certain matters where damage is suffered in the local jurisdiction as a result of a tortious act committed outside the jurisdiction, and allowing foreign courts the jurisdiction to hear such matters.[dclxxiv]

9.60 This concern might arise in Australia where, for example, the courts currently have jurisdiction to hear such matters where a tortious act is committed overseas and at least part of the damage occurs within the jurisdiction.[dclxxv] A convention similar to the form of the Brussels/Lugano Conventions would grant jurisdiction to the court where the harmful event actually occurs, thereby removing jurisdiction of the relevant Australian court. There would, however, be a converse benefit to this for Australia if such a form of convention were to be adopted and the United States were a party. A party committing a tort in Australia could only be sued in Australia and not in the United States, thereby avoiding the risk of an adverse judgment in the United States. Any recovery in the United States in this case would have to rely on the reciprocity regime of the convention by way of enforcement of the decision of the relevant Australian court.[dclxxvi]

9.61 The other concerns and benefits to Australia outlined in the discussion of the Brussels/Lugano Conventions are equally applicable to a multilateral judgments convention of the kind discussed by the Hague Special Commission.

ILA Committee initiatives

9.62 The ILA Committee on International Civil and Commercial Litigation comprises a number of European Union countries, the United States, Australia, Japan, Indonesia, Argentina and Canada and works closely with the Hague Conference on Private International Law. The Committee has recently completed a study of international jurisdiction in tort.

9.63 The Committee is also currently investigating the possibility of international co-operation in relation to the taking of protective and preventative measures. One issue being considered is whether a provision similar to Article 24 of the Brussels/Lugano Conventions should be adopted. This Article allows application to be made in any Contracting State for provisional protective measures even if actual proceedings on the case are not commenced in the court of the Contracting State and the courts of another Contracting State have jurisdiction to hear the substance of the matter forming the dispute. This represents a significant deviation from the common law position.

9.64 A further project undertaken by this Committee involves an examination of the possibility of transnational co-operation regarding the transfer of proceedings to the most appropriate forum.