BNA May 2, 2002

Hague Convention Negotiations Continue; Delegations Appear Ready to Begin Anew

Negotiations over the proposed Hague convention on jurisdiction seem to have been given new life after delegations agreed the week of April 22 to commission a new draft, according to a number of Hague watchers polled by BNA.

Entering the latest meeting of the Hague Conference on Private International Law hoping to persuade other delegations to narrow the scope of a proposed treaty on jurisdiction and foreign judgments, the U.S. delegation expected it might have trouble getting the Europeans to go along.

In fact, it was a growing view among some Hague watchers that talks on the proposed Hague Convention on Jurisdiction and the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters seemed to be grinding down to a standstill due to continuing lack of consensus over how to proceed.

However, the April 22-24 meeting of the Hague Conference's Commission I (General Affairs and Policy of the Conference), which comprises only the diplomatic delegation heads, started off with a bang when the Australian and Japanese delegations submitted a letter taking the position that the conference should go back to the October 1999 draft of the convention, which had long ago been rejected as unworkable by U.S. officials and business interests.

This action could have been a bargaining ploy, but it set off what was described as a ''roller coaster ride'' by Hague watchers over the next few days. In the end, the commission tentatively agreed to set up a new drafting committee and charge it with coming up with an entirely new draft, avoiding the most controversial issues.

The new working group, whose members have not yet been officially named, will most likely be headed up by Andrea Schultz, according to one BNA source. Schultz was formerly a member of the German delegation to the Hague but is now on the Hague Conference's staff.

Long, Winding History.

This meeting came after a number of twists and turns over the years at the Hague Conference. The Hague convention was originally proposed by the United States in 1992 in order to make it easier to enforce the judgments of U.S. courts overseas. Previously, it had been much easier to get a U.S. court to enforce a foreign court's judgment than the other way around.

However, by the time the 1999 draft was issued, the development of electronic commerce had made many of the issues more complicated than they had been. The United States then applied the brakes. From the point of view of U.S. e-commerce interests, ''it's fair to say things didn't go as well as we'd hoped it would go,'' according to Barbara S. Wellbery of Morrison & Foerster, Washington, D.C. Over the last few months, the U.S. delegation has been trying to persuade the Europeans to go with a narrower treaty.

''We had hoped they would be moving in the same direction we would be moving,'' Wellbery told BNA. ''When the Australians and Japanese came along and said we should go back to the October 1999 draft, that gave fuel to the European approach. Under the circumstances, the results that came out of it … is sort of the best we could have expected.''

Wellbery, who was an official of the Department of Commerce during the Clinton administration, said that one of the main concerns is that the current agreement to have a new working group come up with a clean draft is fragile.

''It is not clear there won't continue to be calls to go back to the '99 draft, which is so problematic for the e-commerce industry,'' she said.

Hope for Less Political Atmosphere.

The new working group is to be smaller than past negotiating sessions, with only about 15-20 members, according to Swiss delegate Andreas Bucher, who is likely to be a member of the new drafting group.

It is likely that the working group will meet two or three times this year and try to produce a new draft of the proposed convention early in 2003, Bucher, who is a professor at the University of Geneva, told BNA.

The intent is that the smaller group will be more technically minded and less subject to political winds, Bucher said. The hope is that discussions can be brought to a more concrete level, down from theoretical heights.

Bucher said the new working group will be concentrating on the ''core'' of the convention, which includes relatively noncontroversial issues. There is yet no official list, but likely subjects include choice of court, jurisdiction in the domicile of the defendant, jurisdiction with respect to branches of companies, appearance, physical torts, trusts, and counterclaims.

More controversial topics such as intellectual property, consumer contracts, and employment contracts will be set aside.

Following will be a ''second stage,'' in which ''the group will see whether it is possible to go further on in order to know whether the broad scope of the convention can be kept or not.''

This two-stage process originated with the U.S. delegation, which proposed starting with easy issues and then taking a look at whether more can be done, Bucher said.

''Most delegations have said they are still not prepared to give up the broad project,'' he said, but there is general understanding that there are issues on which there will not be a consensus.

Skepticism as to Avoiding Controversy.

Manon Anne Ress of Essential Information expressed some skepticism that all the issues that have caused concern to U.S. consumer advocates are off the table.

For example, advocates have been concerned that enforcing of intellectual property rights under the convention would result in infringing on individuals' free speech. Ress said that the role of Schultz, an expert in IP law, in the new working group led her to suspect that IP might not be completely off the table.

With regard to physical torts, Ress expressed doubt that it would be easy to separate them from IP torts. Furthermore, there are many countries that are not eager to see U.S.-style torts damages enforceable in their jurisdictions.

''I'm waiting for the commission to say something in public to reassure us on the copyright and the tort issues,'' Ress said.

There has been a suggestion that the new working group would be operating in a ''transparent environment,'' she said, but that consumer interests are taking a wait-and-see attitude regarding whether that will be true.

Ress expressed further doubt that the process will move fast enough for there to be another diplomatic conference in 2003.

''They think this is a narrow convention,'' she said. ''It could be they don't understand how complex it might become.''

And in the end the Europeans have a trump card to nix any agreement, Ress said. So far member states of the European Union have participated in talks as individual entities. There is always a chance, however, that the European Commission can step in at the end and ''renege on any deal at the last minute.''

IP Issues May Reappear.

Even if the proposed convention is narrowed, there is a likelihood that some troublesome issues will not disappear, according to Judith Sapp of Pierce Atwood, Portland, Maine, who represents the International Trademark Association.

Some interests in the intellectual property arena have been concerned that the convention as proposed would result in issues such as trademark matters being heard by foreign courts that might have no expertise in the matter, Sapp told BNA.

''What we would like and what we believe is essential for trademark owners is that only courts or agencies of a government in which the trademark arose should be able to determine whether a mark is entitled to registration there and whether a mark there has been infringed,'' she said.

Unless the convention expressly excludes intellectual property judgments from its scope, then there is still a chance that the convention's principles would apply to IP matters, Sapp said.

''To our way of thinking, trademark law is extremely territorial and needs to stay that way,'' she said.

By Anandashankar Mazumdar
Text of documents related to the proposed Hague convention are available at the Web site of the Hague Conference on Private International Law, http://www.hcch.net .
Copyright©2002 by The Bureau of National Affairs, Inc., Washington D.C.