Can parties agree on a competent court in advance?
"Choice of court clauses" in which parties of a contract determine, for example, a specific court, or the courts of a specific country, to have jurisdiction over disputes arising between them in connection with that contract, are widely utilized. A survey prepared for the Hague Conference on Private International Law (2002) found that such clauses are particularly common in certain industries, such as insurance contracts, cross-border distributorships, loan contracts, guarantees and international commercial agreements. A set of choice of court practices of companies engaged in international business is available in a recent survey undertaken by the International Chamber of Commerce (ICC) (2003), which reflects the input of more than hundred companies from all parts of the world.
Despite their prevalence in contracts, national systems vary considerably as to the prerequisites of choice of court clauses.
While a number of countries place strict formalities on the acceptance of such clauses, such as the identification of a particular court, other countries also limit the possibility of choice of court clauses to business-to-business (B2B) contracts, or provide special requirements and limitations for clauses involving consumers. For instance, the Brussels I Regulation allows choice of court clauses in consumer contracts, which depart from the specific consumer jurisdiction rules set out in the Regulation, only under strictly limited conditions, for example if the agreement is entered into after the dispute has arisen (Art. 17).
The forum non conveniens doctrine, a legal doctrine found mostly in common law jurisdictions, allows courts to refuse to hear an action because jurisdiction might be more appropriately or efficiently asserted by in an alternate forum. In practice, however, for example in the US, courts will almost never rely on this doctrine so long as there is any plausible connection to the legal forum selected by the parties. Legal precedent has created a strong presumption that a forum freely selected by the parties is valid. Hence, the party wishing to void a choice of court clause will have a heavy burden of proof in establishing that the chosen venue is improper.
In order to harmonize at least some of these issues, and to create greater predictability and reliability in this field, the 65 Member States of the Hague Conference on Private International Law adopted, on June 30, 2005, a new treaty, the Hague Convention on Choice of Court Agreements. WIPO, as an observer to the Hague Conference on Private International Law, had submitted detailed comments (Preliminary document No. 29 Addendum 1 [ PDF]), in particular with a view to the implications of the instrument on disputes involving intellectual property matters.
Generally, the Convention aims to ensure three basic rules, each of those subject to certain exceptions: first, for the designated court to assert jurisdiction, essentially excluding judicial discretion under the forum non conveniens doctrine; second, for any other court to decline jurisdiction; and finally to recognize and enforce judgments rendered by a designated court abroad, without a review of the merits of the case. Disputes involving intellectual property are subject to specific rules under the Convention: Art. 2 (2) (n) and (o) of the Convention, to be read in conjunction with Art. 2 (3) of the Convention, exclude certain validity and infringement proceedings from the Convention's scope of application; moreover, recognition and enforcement of judgments based on certain validity determinations are addressed in Art. 10 (3) of the Convention. For an analysis of the new treaty see the bibliography made available by the Hague Conference on Private International Law .