FC: Hague Convention a good start, helps small firms, by John Noble

From: Declan McCullagh (declanat_private)
Date: Wed Jun 06 2001 - 15:17:52 PDT

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    Background: http://www.politechbot.com/cgi-bin/politech.cgi?name=hague
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    Date: Wed, 6 Jun 2001 12:40:14 -0400
    To: declanat_private, politechat_private
    From: John Noble <jnobleat_private>
    Subject: Re: FC: Why the Hague Convention is a terrible idea, by Jamie Love
    In-Reply-To: <5.0.2.1.0.20010605094023.00a65db0at_private>
    
    At 9:40 AM -0400 6/5/01, Declan McCullagh wrote:
    
     >Perhaps in the final draft, the costs of the Hague convention will outweigh
     >the benefits. But I'd like to see more discussion of both, and I invite
     >politechnicals to respond.
     >
    
    
     >I.  INTRODUCTION.
     >
     >This note addresses concerns over the negotiations for a new
     >treaty that seeks to strengthen the global enforcement of
     >private judgments and injunctive relief in commercial
     >litigation.  While the convention would clearly have some
     >benefits, in terms of stricter enforcement of civil
     >judgments, it would also greatly undermine national
     >sovereignty and inflict far-reaching and profound harm on the
     >public in a wide range of issues.
    
    The scope of the acknowledged benefit -- stricter enforcement of civil
    judgments -- seems to be the precise measure of the threatened harm to
    national sovereignty. In other words, the only the sovereign power that is
    surrendered is the right to refuse to enforce foreign judgments. If that is
    both the benefit and threat, I assume that Jamie means it is beneficial
    when the enforceable judgment is subjectively fair, and harmful when the
    enforceable judgment is subjectively unfair, determined according to the
    legal and cultural norms of the sovereign that is called upon to enforce
    the foreign judgment. The potential harm is addressed by the "manifestly
    incompatible with public policy" exception; and whether the harm is as
    "profound" as Jamie suggests will depend on the scope of the exception.
    
    With respect to particular concerns:
    
     >3.  A judgment in one country is enforced in all Hague
     >convention member countries, even if the country has no
     >connection to a particular dispute.
    
    Except jurisdiction over some one or some thing that can be used to satisfy
    the judgment.
    
     >
     >4.  There are no requirements to harmonize national laws on
     >any topic, except for jurisdiction rules, and save the narrow
     >Article 28(f) public policy exception, there are no
     >restrictions on the types of national laws that to be
     >enforced.
    
    I'm sure Jamie isn't arguing for the harmonization of national laws, a
    prospect which would surely kill the prospect of cross-border enforcement.
    And while the scope of civil judgments covered by the convention is broad,
    it is important to note that it is limited to civil, not criminal,
    judgments. The public policy exception looks to be flexible enough to
    address the problems that might be envisioned, and I guess what I would
    like is an example of a judgment that should not be enforced, but is
    unavoidably enforceable under the convention.
    
     >
     >5.  All "business to business" choice of forum contracts are
     >enforced under the convention.  This is true even for non-
     >negotiated mass-market contracts.  Under the most recent
     >drafts of the convention, many consumer transactions, such as
     >the purchase of a work related airline ticket from a web
     >site, the sale of software to a school or the sale of a book
     >to a library, is defined as a business to business
     >transaction, which means that vendors of goods or services or
     >publishers can eliminate the right to sue or be sued in the
     >country where a person lives, and often engage in extensive
     >forum shopping for the rules most favorable to the seller or
     >publisher.
    
    The choice of forum enforcement provision seems to be the main objection.
    It would deny a business access to local courts, but it would at the same
    time shield a business from being hauled into foreign courts. We can
    quibble over what is or is not a business-to-business transaction, but I
    think Jamie's examples -- tickets for business travel and books for school
    libraries -- illustrate the point. It is the relatively small "businesses"
    that stand to gain the most from the convention. Those are precisely the
    businesses that would have to forfeit the opportunity to offer their
    products or services in international commerce if they could not protect
    themselves from being hauled into court by a disgruntled customer in East
    Timor. Whoever is offering a product or service has to have some way of
    knowing the rules under which he may be held liable and controlling the
    legal cost of doing business. Unless you enforce choice of forum clauses,
    you are in fact imposing a different rule -- you cannot sell products or
    services to Americans unless you submit to American courts. And that goes
    for you too, America -- you cannot sell your products and services overseas
    unless you are willing to submit to the jurisdiction of overseas courts.
    Maybe that is the right rule, but Jamie isn't going to like the result
    because the only companies that will be able to engage in international
    commerce are the big dogs who can afford to have offices and lawyers all
    over the world.
    
    I think there's a fundamental illogic in demanding the ability to get a
    judgment anywhere, while opposing the ability to enforce a judgment
    anywhere. What's the point in safeguarding the right to a judgment under
    local law if it is unenforceable where the defendant has located its assets.
    
     >
     >6.  There are currently 49 members of the Hague Conference,
     >and it is growing.  They include: Argentina,  Australia,
     >Austria, Belgium,  Bulgaria,  Canada,  Chile,  China,
     >Croatia,  Cyprus,  Czech Republic,  Denmark,  Egypt,
     >Estonia,  Finland,  Former Yugoslav Republic of Macedonia,
     >France,  Germany,  Greece,  Hungary,  Ireland,  Israel,
     >Italy,  Japan,  Republic of Korea,  Latvia,  Luxembourg,
     >Malta,  Mexico,  Monaco,  Morocco,  Netherlands,  Norway,
     >Peru, Poland,  Portugal,  Romania,  Slovakia,  Slovenia,
     >Spain,  Suriname,  Sweden,  Switzerland,  Turkey,  United
     >Kingdom of Great Britain and Northern  Ireland,  United
     >States of America,  Uruguay and Venezuela
    
    Ask yourself why an economic powerhouse like Belgium would make common
    cause with the United States, Germany and Japan on this issue. I think all
    of these smaller countries recognize that it opens the door of
    international commerce to the much smaller players in their much smaller
    economies.
    
    The United States has operated under a similar regime for over 200 years
    without dire consequences. The Constitution's Full Faith and Credit clause
    requires every state to recognize and enforce every other state's
    judgments. I realize there are difference, but they don't seem to
    distinguish the general framework that Jamie describes. The ability to
    agree upon what the rules are, and then to enforce them, is really the
    cornerstone of an integrated economy. Even if the details need work, it
    seem like a good place to start.
    
    John Noble
    
    
    
    
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