ISBN: 978-1-920838-38-6 (online)

© Commonwealth of Australia 2018

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Contents

Executive summary

1.Introduction

Challenges

Drivers for change

Other considerations for Australian stakeholders

2.Current arrangements for recognition and enforcement of foreign judgments in Australia

FJA and the common law

FJA considerations

Common law considerations

Current bases for non-enforcement or setting aside of a foreign judgment

3.The Hague Conference Judgments Project

Structure of the draft Convention

Key provisions

4.Main issues to consider

Scope of the Convention

Bases for recognition and enforcement

Refusal of recognition or enforcement

Other provisions

5.Intellectual property matters

Scope

Exclusion of intellectual property

Inclusion of intellectual property

Discretionary safeguards

Remedies and damages

Questions

Examples

Attachment A – Draft Convention of November 2017

Attachment B – Flowchart for the FJA and the common law

Attachment C – Flowchart for the draft Convention of November 2017

Attachment D – Flowchart for IP matters under the draft Convention of November 2017

Through the Hague Conference on Private International Law, the Australian Attorney-General’s Department (AGD) is currently engaged in negotiations on behalf of Australia for a draft Convention that is intended to establish uniform rules for the recognition and enforcement of foreign judgments in civil or commercial matters (the Hague Conference Judgments Project).[1]

The draft Convention aims to provide parties to litigation with a simple and predictable framework that will govern how a judgment in one Contracting State (a State that signs up to the Convention) can be recognised and enforced in another Contracting State.

To inform Australia’s negotiating position, this consultation paper seeks public comment on law and policy matters raised in the draft Convention of November 2017, a copy of which is attached (AttachmentA). The draft Convention may also be downloaded from the Hague Conference website (

AGD is seeking both general and specific comments on the proposed text of the draft Convention ahead of a fourth, and possibly final, meeting of a Hague Special Commission from2429May 2018. The purpose of the Special Commission meeting is to develop an appropriate text that can be submitted to a Diplomatic Conference for final negotiations and agreement. The SpecialCommission, set up by the Hague Conference in 2016, has met three times over the past two years to prepare the current draft Convention.

The fourth meeting of the Special Commission will focus on a limited number of outstanding issues. This includes contentious issues such as the extent to which intellectual property and privacy should fall within the scope of the draft Convention. Some members of the Special Commission propose that matters relating to intellectual property should be excluded from the draft Convention completely, while others seek its general inclusion, or inclusion on a restricted basis(see Part 5 for further discussion on intellectual property).

Any text in the draft articles in square brackets is not yet settled. That text includes intellectual property and privacy matters. Square brackets represent proposals, alternatives and options that are the subject of ongoing consideration by members of the Hague Conference.

It is intended that a draft Convention will be put to a Diplomatic Conference of the Hague Conference for consideration and conclusion no earlier than 12 months after the final meeting of the Special Commission (on current timing that is mid-2019 at the earliest). Until it has been concluded at a Diplomatic Conference, the text in the draft Convention is not finalised.

If the draft Convention is concluded at a Diplomatic Conference of the Hague Conference, and Australia determines that it is appropriate to sign the Convention, its implementation in Australia will be subject to the usual government processes and Joint Standing Committee on Treaties processes and review. Implementation is likely to require subsequent amendments to Australian domestic legislation.

The Australian Attorney-General’s Department invites you to contribute to consideration of the Hague Conference Judgments Project by making a submission on this consultation paper.

This consultation paper provides readers with a short description of the current pathways for the recognition and enforcement of foreign judgments in Australia. It then outlines key provisions in the draft Convention and the rationale behind them. This paper also highlights key issues, areas for continued negotiation, and questions that stakeholders may wish to consider in commenting on the draft Convention.

Comments may address any one or more of the questions thatappear throughout the paper.

Written submissions are requested no later than COB 27 April 2018 andare tobe sent to: . Any queries concerning the consultation process may also be directed to this email address.

Submissions may be made public on the AGD website.

If you do not want your submission to be made public, mark it as confidential. Please note that submissions or comments will generally be subject to freedom of information provisions.

1.1When parties are involved in a civil or commercial dispute before a court, a key practical outcome for both sides is a judgment that resolves the rights and liabilities of the parties. For the successful party, an outcome should involve ensuring that the judgment is recognised and enforced in order to obtain meaningful relief (ie a practical result). For Australian judgments enforced in Australia, such an outcome is to be expected and the rules to be applied for enforcement are relatively clear. Matters become less clear in circumstances where a judgment might need to be recognised and enforced in a foreign country, or where a foreign judgment might need to be recognised and enforced in Australia.

Examples of judgments that might need to be recognised and enforced in a foreign country:
  • Example 1: Gabriella, from Spain, rented Anthony’s holiday house in Australia for the summer. She hosted some parties in which the house was damaged. Anthony sued Gabriella for damages in Australia and obtained a judgment in his favour. He now seeks to have the judgment recognised and enforced in Spain.
  • Example 2: Emily lives in Australia. Paul lives in Italy. Paul has been granted separate patents for an invention in Italy, the UK and Japan. Emily produced a product in Italy and the UK very similar to Paul’s protected invention. Paul now wants to sue Emily for infringement of his patents in Italy and the UK, but knows that Emily’s assets are all located in Australia.
  • Example 3: Chloe lives in the Netherlands and Dave lives in Australia. They signed a contract for the delivery of goods in which they agreed that, in case of dispute, French courts would have jurisdiction. Dave sued Chloe for damages in France and obtained a judgment in his favour. Dave now seeks to have the judgment recognised and enforced in the Netherlands.

Challenges

1.2Currently, parties must look to a country’s or a region’s private international law principles and rules to determine how foreign aspects in a legal problem or dispute should be handled.[3] This may include ascertaining whether a judgment is enforceable in a foreign country in which a judgment debtor has assets located to satisfy a monetary judgment given in Australia. It may also involve circumstances in which a party seeks to enforce a foreign judgment against a debtor in Australia. Given private international law principles and rules on the recognition and enforcement of judgments are not uniform across countries, this can often be a complex exercise which lacks certainty and predictability as parties must consider national law and a patchwork of conventions in operation between different groupings of countries.

Example 4: If a successful party sought to enforce an Australian judgment in the United States because the judgment debtor had transferred all its assets there, the relevant rules for recognition and enforcement of a foreign judgment would be governed by the local law of each US state in which those assets happened to be located. For jurisdictions without clear guidance for recognition and enforcement of foreign judgments, the successful party may be faced with great uncertainty as to how the Australian judgments would be recognised and enforced, if at all.

Drivers for change

1.3The main goals of the draft convention on the recognition and enforcement of judgments are to enhance access to justice (by assisting the successful party with a clearer pathway to obtain meaningful relief), to reducethe costs of and streamline legal processes involved in crossborder dealings,and to help address associated risks. To achieve these goals, this paper recognises that the draft Convention would need to be widely ratified.For example, if the United States did not ratify the Convention, then (per the previous example) a successful party seeking to enforce an Australian judgment in the United States would still need to determine the applicable state’s laws in relation to recognition and enforcement of a foreign judgment.

1.4If the draft Convention attracts wide membership, then the need for a party to bring substantiveproceedings in more than one country in order to obtain a practical outcome can be avoided (for Contracting States). The framework provided by the draft Convention is intended to improve certainty, clarity and predictability, thereby potentially reducing the costs and timeframes associated with obtaining recognition and enforcement of a judgment, while also enabling and guiding parties to make more informed and efficient choices about where to bring initial proceedings.

1.5Arguably, a widely accepted Convention could increase certainty and predictability in crossborder dealings. It could also promote efficiency in the use of judicial resources by encouraging parties to resolve all issues in initial court proceedings.

Other considerations for Australian stakeholders

1.6If the Convention is concluded and then subsequently implemented domestically in Australia, there will be implications for Australian stakeholders. For example, while Australian judgments may have greater scope for recognition and enforcement overseas (noting that the draft Convention will not apply to all countries but only to those that are Contracting States), foreign judgments given against Australian defendants may also have greater scope for being eligible for recognition and enforcement in Australia. Additionally, judgments may be recognised and enforced in circumstances in which they might not previously have been eligible (eg they are non-monetary judgments). Therefore, while the draft Convention could be beneficial to Australian plaintiffs seeking to enforce judgments overseas, Australian stakeholders will also need to consider the implications of incoming judgments for defendants, noting that there is some discretionary language in the text which will allow for relevant courts to consider the application of certain provisions in their jurisdiction (eg, in relation to when recognition or enforcement of a judgment may be refused).

1.7As the draft Convention will only apply between Contracting States, it is important to recognise that the current regimes for recognition and enforcement of judgments would also continue to operate in Australia (see Part 2 for more detail on current regimes in Australia). The current regimes will also continue to apply to categories of judgments that are excluded from the scope of the draft Convention. Should Australia choose to become a party to the Convention, the government will consider relevant amendments to domestic law in order to ensure that pathways for recognising or enforcing a judgmentare clearer for stakeholders given this Convention will provide an additional regime for recognition and enforcement of judgments.

Question 1
Have you experienced any problems with seeking to recognise or enforce a foreign judgment? If so, what have the main problems been? What are the benefits for Australian parties in the recognition and enforcement of foreign judgments abroad, and what are the risks for Australian parties if foreign judgments are recognised and enforced in Australia or overseas?
  1. Current Arrangements for Recognition and Enforcement of Foreign Judgments in Australia
  2. Whether a foreign judgment can currently be enforced in Australia or not depends on where the judgment was issued and the type of judgment that was issued.

2.2Currently, foreign judgments may be eligible for recognition and enforcement in Australia under three regimes: (i) the Foreign Judgments Act 1991 (Cth) (FJA) – which only applies to the 33 countries listed in the Foreign Judgments Regulations 1992 (the Regulations);[4] (ii) the TransTasman Proceedings Act 2010 (Cth) (TTPA) – which only applies to judgments between Australia and New Zealand; and (iii) the common law.

2.3If a foreign judgment falls under the FJA, it must be enforced under the FJA.[5]Likewise, the TTPA also applies with exclusive effect to judgments between Australia and New Zealand. If a foreign judgment does not fall under the FJA or TTPA, that judgment can only be enforced at common law.

2.4The flowchart at Attachment B outlines the current pathways for recognition and enforcement of a judgment under the FJA and the common law.

FJA and the common law

2.5The FJA provides a statutory regime for the reciprocal enforcement of foreign judgments (which means there is substantial reciprocity of treatment assured in relation to the enforcement in a foreign country of judgments given in an Australian court). The FJA provides that unless the Regulations provide otherwise (which they currently do not), the only foreign judgments that are enforceable under the Act are ‘money judgments’ (that is, a judgment under which money is payable). The FJA currently only applies to enforceable monetary judgments that are final and conclusive. This means, for example, that a nonmonetary judgment (eg an order granting an injunction prohibiting further infringements or an order for specific performance) would not be enforceable under the FJA.

2.6The Regulations list the superior courts of 33 countries that have similarly provided for the enforcement of Australian court judgments.[6] Notably, the courts of some of Australia’s main trading partners (eg the United States and China) are not part of this scheme. If a foreign judgment originates from a country not listed in the Regulations, then the plaintiff must turn to the common law to seek potential recognition and enforcement of that judgment. The common law has a requirement similar to the ‘money judgment’ requirement of the FJA. At common law, a foreign judgment is only enforceable if it is for a fixed sum of money.

FJA considerations

2.7Subject to certain conditions, if the court of a country listed in the Regulations makes a final and conclusive judgment pursuant to which money is payable and not wholly satisfied, an application may be made to the relevant Australian court for registration of that foreign judgment. Once registered, the foreign judgment is enforced as a judgment of the Australian court. Section 7 of the FJA sets out grounds upon which a judgment debtor can have the registration of the foreign judgment set aside (further detail below).

Common law considerations

2.8To recognise a foreign judgment at common law, an Australian court will first need to consider whether the foreign court had international jurisdiction to hear the matter. This may, for example, be established when a defendant has voluntarily submitted to the jurisdiction of a foreign court, or whereit has ‘presence’ in the foreign jurisdiction (for a corporation, this is satisfied if it was ‘carrying on a business’ in the foreign jurisdiction).

2.9On the whole, the grounds of international jurisdiction under the FJA are broader than the common law. However, there are cases in which the common law, but not the FJA, would recognise a foreign court’s jurisdiction. For example, the FJA recognises a foreign court as having jurisdiction over a corporation if its principal place of business is in the foreign country, whereas at common law the location of any office would suffice. In such circumstances, a foreign judgment may be eligible for enforcement through the common law but not through the FJA. As noted earlier, if a foreign judgment falls under the FJA (ie it is a judgment from a foreign court listed in the Regulations), it must be enforced under the FJA;[7] otherwise, it can only be enforced at common law.

Current bases for non-enforcement or setting aside of a foreign judgment

2.10There are a number of common grounds under the FJA, TTPA and common law upon which judgments can be set aside. These grounds include: (i) where a judgment was obtained by fraud (eg the plaintiff lied to the Court); (ii) where enforcement would be contrary to public policy (courts have interpreted this to be a high threshold, eg where enforcement would be detrimental to national interests (generally in foreign affairs), or the result of the particular case would be unacceptably unjust); or (iii) where proceedings have breached natural justice (eg, the defendant did not receive notice of the proceedings, or was not given a fair opportunity to present a case).

Question 2
Have you encountered issues and/or inconsistencies with the current regimes for recognition and enforcement of either Australian judgments in foreign countries or foreign judgments in Australia? If so, please provide details.
Issues may encompass increased costs and timeframes associated with obtaining recognition and enforcement of judgments, including through duplicative proceedings in more than one jurisdiction, or an inability to obtain meaningful relief. Information on types of judgments and jurisdictions relevant to your experience is appreciated.