D R A F T

FOR DISCUSSION ONLY

UNIFORM INTERNATIONAL CHOICE OF COURT

AGREEMENTS ACT

__________________________________________________________

NATIONAL CONFERENCE OF COMMISSIONERS

ON UNIFORM STATE LAWS

__________________________________________________________

For March 5-7, 2010 Drafting Committee Meeting

With Prefatory Note and Reporters’ Notes

Copyright © 2010

By

NATIONAL CONFERENCE OF COMMISSIONERS

ON UNIFORM STATE LAWS

____________________________________________________________________________

The ideas and conclusions set forth in this draft, including the proposed statutory language and any comments of Reporter’s Notes, have not been passed upon by the National Conference of Commissioners on Uniform state laws of the Drafting Committee. They do not necessarily reflect the views of the Conference and its Commissioners and the Drafting Committee and its Members and Reporters. Proposed statutory language may not be used to ascertain the intent or meaning of any promulgated final statutory proposal.

February 18, 2010

DRAFTING COMMITTEE ON UNIFORM INTERNATIONAL

CHOICE OF COURT AGREEMENTS ACT

            The Committee appointed by and representing the National Conference of Commissioners on Uniform State Laws in drafting this Act consists of the following individuals:

REX BLACKBURN, P.O. Box 70 (83707), 1221 W. Idaho St., Boise ID 83702, Chair

C. ARLEN BEAM, U.S. Court of Appeals, 435 Federal Bldg., Lincoln, NE 68508

RHODA B. BILLINGS, 5525 Williams Rd., Lewisville, NC 27023

K. KING BURNETT, P.O. Box 910, Salisbury, MD 21803-0910

ROBERT H. CORNELL, 573 Arkansas, San Francisco, CA 94107

HENRY DEEB GABRIEL, JR., Elon University School of Law, 201 N. Greene St., Greensboro, NC 27401

HARRIET LANSING, 313 Judicial Center, 25 Rev. Dr. Martin Luther King Jr. Blvd., St. Paul, MN 55155

RYAN LEONARD, 116 E. Sheridan, Suite 207, Oklahoma City, OK 73104

HARVEY S. PERLMAN, University of Nebraska – Lincoln, 201 Canfield Administration Bldg.,

            Lincoln, NE 68588-0419

DANIEL ROBBINS, 15301 Ventura Blvd., Bldg. E, Sherman Oaks, CA 91403

MARTHA L. WALTERS, Oregon Supreme Court, 1163 State St., Salem, OR 97301-2563

H. KATHLEEN PATCHEL, Indiana University School of Law – Indianapolis, 5715 E. 56^th St.,

            Indianapolis, IN 46226, National Conference Reporter

LOUISE ELLEN TEITZ, Roger Williams University School of Law, Ten Metacom Ave., Bristol,

            RI 02809, Co-Reporter

EX OFFICIO

ROBERT A. STEIN, University of Minnesota Law School, 229 19th Ave. S., Minneapolis, MN

            55455, President

MARILYN E. PHELAN, Texas Tech University School of Law, 1802 Hartford Ave., Lubbock, TX 79409, Division Chair

AMERICAN BAR ASSOCIATION ADVISOR

GUY S. LIPE, First City Tower, 1001 Fannin St., Suite 2500, Houston, TX 77002-6760, ABA Advisor

EXECUTIVE DIRECTOR

JOHN A. SEBERT, 111 N. Wabash Ave., Suite 1010, Chicago, IL 60602, Executive Director

Copies of this Act may be obtained from:

NATIONAL CONFERENCE OF COMMISSIONERS

ON UNIFORM STATE LAWS

111 N. Wabash Ave., Suite 1010

Chicago, IL 60602

312/450-6600

www.nccusl.org

UNIFORM INTERNATIONAL CHOICE OF COURT AGREEMENTS ACT

TABLE OF CONTENTS

Prefatory Note

SECTION 1. SHORT TITLE

SECTION 2. DEFINITIONS

SECTION 3. IMPLEMENTATION OF CONVENTION.

SECTION 4. SCOPE

SECTION 5. EXCLUSIVE CHOICE OF COURT AGREEMENT AS INDEPENDENT AGREEMENT

SECTION 6. WHEN CHOICE OF COURT AGREEMENT DEEMED EXCLUSIVE

SECTION 7. RESIDENCE OF AN ORGANIZATION

SECTION 8. DUTY OF CHOSEN COURT TO ACCEPT JURISDICTION

SECTION 9. DUTY OF COURT NOT CHOSEN TO DECLINE JURISDICTION

SECTION 10. RECOGNITION OF JUDGMENT OF CHOSEN COURT OR COURT TO WHICH CASE HAS BEEN TRANSFERRED

SECTION 11. EXCEPTIONS TO RECOGNITION OF A JUDGMENT

SECTION 12. PRELIMINARY QUESTIONS.

SECTION 13. NON-COMPENSATORY DAMAGES.

SECTION 14. RECOGNITION OF JUDGMENTS BASED ON CONTRACTS OF INSURANCE

SECTION 15. RECOGNITION OF JUDGMENT RENDERED BY COURT CHOSEN IN NON-EXCLUSIVE CHOICE OF COURT AGREEMENT

SECTION 16. DOCUMENTS TO BE PRODUCED IN CONNECTION WITH

            REQUEST FOR RECOGNITION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41

SECTION 17. PROCEDURE FOR RECOGNITION OF JUDGMENT.

SECTION 18. STATUTE OF LIMITATIONS APPLICABLE TO RECOGNITION PROCEEDINGS

SECTION 19. JUDICIAL SETTLEMENTS

SECTION 20. LEGALIZATION.

SECTION 21. INTERNATIONAL CHARACTER; UNIFORMITY OF

            INTERPRETATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

SECTION 22. SAVINGS CLAUSE

SECTION 23. SEVERABILITY

SECTION 24. TRANSITION PROVISIONS

SECTION 25. EFFECTIVE DATE

UNIFORM INTERNATIONAL CHOICE OF COURT AGREEMENTS ACT

Prefatory Note

I. Introduction

            The Hague Choice of Court Agreement Act, in conjunction with federal legislation, will implement the Hague Convention on Choice of Court Agreements in the United States. The Convention, the product of over a decade of multilateral negotiations, validates party autonomy by enforcing exclusive choice of court agreements and the judgments that result from them, as will the Act. The Convention is an immeasurably valuable treaty that will help create certainty and predictability for transactional planning, validate party autonomy, facilitate the free movement of judgments, and provide a foundation for further cooperation and harmonization of law. Implementation through a federal statute including provisions for states to choose to opt into the Uniform Law will allow this area to continue to incorporate state law, facilitating greater consistency with existing state law in the broader area of judgment recognition and enforcement.

II. History of the Hague Convention on Choice of Court Agreements

            The Act is best viewed in the context of the Hague Convention on Choice of Court Agreements and its history. The United States is not a party to any bilateral or multilateral agreements on the recognition and enforcement of foreign civil judgments. Currently, the recognition and enforcement of judgments is a matter of state rather than federal law, and in more than 30 states there is a highly successful Uniform Law that covers foreign money judgments. While the Uniform Law and state common law control the recognition and enforcement of incoming foreign judgments, US private parties often are unable to enforce US judgments abroad with the same degree of success as incoming judgments. In light of this, the US encouraged The Hague Conference on Private International Law, beginning in 1992-93, to undertake drafting a multilateral convention on jurisdiction and the recognition and enforcement of judgments. Negotiations continued until 2001, when an Interim Draft was produced at a diplomatic session. Following this session it was clear that no workable comprehensive jurisdiction and judgments convention was likely to result, due to multiple obstacles, including the rise of the internet and electronic commerce, the role of the consumer, and the increased integration of the European Community.  

            After the stalemate in 2001, some country members of the Hague Conference called for a less inclusive convention, a choice of court/forum convention that would enforce forum selection clauses and the resulting judgments, much as the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) does with arbitration clauses and subsequent arbitral awards. A choice of court convention would have a positive impact not only on dispute resolution but also on transactional planning, providing enforcement for exclusive choice of court clauses as well as for the resulting judgments. Following several meetings, a final text was completed and signed at a diplomatic session in June 2005.

III. Structure of the Hague Convention on Choice of Court Agreements

            The Convention is broken into four chapters: (1) scope, exclusions, definitions; (2) jurisdiction or what we view as enforcement of choice of forum clauses; (3) recognition and enforcement, in this case of the resulting judgments; and (4) general provisions in international instruments and relationship to other instruments. The Convention applies to exclusive choice of court agreements in civil or commercial matters not excluded from scope under Article 2 or under Declarations. The Convention requires that the chosen court in an “exclusive choice of court agreement” must accept jurisdiction and thus is obligated to hear the dispute (Article 5). The Convention also requires a nonchosen court “to suspend or dismiss proceedings.” (Article 6). Within this general context, there are exceptions. These are not primarily defined by autonomous terms in the Convention, but instead by reference to the appropriate national (State) law, in some cases including the jurisdiction’s choice of law rules. Since much of the area in US law is governed by state law, especially state substantive law, that law would determine both the scope of the Convention and the exceptions to jurisdiction. The Convention also requires member states to recognize and enforce a judgment given by the chosen court (Article 8), with Article 9 providing exceptions similar to Article 6 and a choice of law rule as well. Recognition and enforcement of a judgment that results from an exclusive choice of court clause designating a member state may be refused generally only if the agreement is null and void according to the chosen court’s whole law, the party lacked capacity under the law of the requested state, the defendant didn’t have sufficient notice, the judgment was obtained by fraud, or the recognition would be “manifestly incompatible” with public policy.

IV. Changes to Existing Law in the United States

            There are several aspects of existing U.S. law that will be affected by the Convention. The Act accommodates these and the Reporter’s Notes have highlighted them where possible. The more significant changes are in the jurisdiction or enforcement of the choice of law clauses (Chapter II) rather than in the recognition or enforcement of the resulting judgment (Chapter III).

            In some respects, there will be less opportunity for variation among existing state law.

For example, many states now vary on aspects of formal validity required in a choice of court/forum clause, such as bold type face or size of font required for the clause to be effective. The Convention defines formal validity as requiring a writing or its equivalent (Article 3(c)) and this is included in the Act in the definitions of a “choice of court agreement” and “record” (Section 3(1) and (12).) Nothing more is or may be required by state law for formal validity, thus limiting existing state variations.

            A. Presumption of Exclusivity

            The most significant change is the presumption of exclusivity. Under Article 3(b), the Convention provides that if a choice of court agreement designates the courts of only one country, the agreement is deemed to be exclusive unless otherwise “expressly provided.” This presumption is contrary to that applied by the majority of state courts or federal courts in diversity which generally requires specific language of exclusion. This presumption has been highlighted by including a separate provision, Section 6, given the significant change from existing law.

            B. Exclusion of Forum Non Conveniens

            A second significant change is in the area of forum non conveniens. Article 5(2) of the Convention provides that where a court has jurisdiction, the court “shall not decline to exercise jurisdiction on the ground that the dispute should be decided in a court of another State.” The doctrine of forum non conveniens exists in federal courts and in most state court systems, providing a mechanism for dismissal of cases that are more appropriately heard by other courts, for reasons which may include the lack of connection to the forum. Approximately 47 states have some version of forum non conveniens and not all are identical to federal doctrine. At least twenty-two states have enacted forum non conveniens statutes or promulgated rules of civil procedure. Some of these statutes are designed to address certain types of cases, many of which are outside the scope of the Convention. The majority of states have been able to avoid hearing cases which are not sufficiently connected or related to the forum through the doctrine of forum non conveniens. This possibility will be circumscribed in connection with those cases that fall under the Convention where the parties have selected an exclusive forum. The application of Article 5(2) then mandates that the chosen court has no discretion to dismiss for forum non conveniens in this circumstance.

            The Convention does, however, specifically limit the application of Article 5(2) so that a court without subject matter jurisdiction is not forced to hear a case. Article 5(3) provides:

3. The preceding paragraphs shall not affect rules -

a) on jurisdiction related to subject matter or to the value of the claim;

b) on the internal allocation of jurisdiction among the courts of a Contracting State. However, where the chosen court has discretion as to whether to transfer a case, due consideration should be given to the choice of the parties.

The current draft of the Act provides for these unrelated cases that were often previously avoided by forum non conveniens in state and federal court by doctrines of subject matter jurisdiction in optional Section 8 [c].

            C. Validity and Enforceability of Choice of Court Clause

            As mentioned above, the Convention only addresses validity in terms of form, not substance. The Convention leaves open to national law questions of substantive validity, but does, however, include choice of law rules for aspects of that decision. The Convention requires that questions of whether an agreement is invalid (null and void) are to be made under “the law of the chosen court,” Article 5(1), with “law” including the choice of law rules of the chosen court. Thus, in a choice of court agreement with Oslo as the chosen forum, the question of validity by a nonchosen Minnesota court would be determined under the whole law of Norway. This approach could vary from that currently used where the state choice of law rules differ from that of the chosen court’s law. The nonchosen court may decide questions of capacity under its law, with the whole law being implicated. Since there are no federal choice of law rules for contracts, the determination, even by a federal court, will be according to the state in which the court is located. In connection with the Convention, there is the complication of a US state or federal court looking at a choice of court agreement in an international case that selects London for example, being faced with determining the validity of the agreement under English law, including its choice of law rules, and the impact of European Regulation.

V. Existing State and Uniform Law

            As mentioned above, the US is not a party to any bilateral or multilateral convention on the recognition and enforcement of civil judgments and is not likely to become one in the near future, other than the Convention once ratified by the US. The recognition and enforcement of judgments is currently a matter of state rather than federal law. The Uniform Law Commission has produced two highly successful and widely adopted Acts covering the area of money judgments from foreign countries, a portion of the area that will be affected by the Convention. Even in those states that have not adopted either the Uniform Foreign-Money Judgments Recognition Act (1962) or the revised Uniform Foreign Country Money-Judgment Recognition Act (2005), the law governing recognition in a federal court is generally state law. Questions of existence, validity, and effect of a choice of court agreement are also matters largely still governed by state law, especially state contract law. Although the National Conference previously drafted a model law covering choice of court agreements, the Model Choice of Forum Act, approved in 1968, was withdrawn in 1975 after only three states had adopted it. Its principles continue to influence the development of the common law in this area.

            The Act is drafted to work in conjunction with the existing UFCMJRA, especially in the area of recognition and enforcement, such as procedures for recognition (Section 20), statutes of limitations (Section 21), and stays (Section 22). There will be some differences, such as when the Act applies, it may limit a state’s grounds for nonrecognition of a judgment under the UFCMJRA (e.g., for an inconvenient forum with tag jurisdiction). The Act affects only a small area of judgments -- those that result from exclusive choice of court agreements – and its application is not limited to money judgments (Section 3(8)). Thus there is only a limited area of overlap with the UFCMJRA.

VI. Drafting Principles

            The Act attempts to integrate the Convention into state law. Because of the implementation through conditional preemption and allowing states to opt out of the federal statute into an approved state uniform law, there are multiple documents that have been considered in drafting the Act, not only the Convention and the federal implementing statute, but also existing state uniform laws. The main drafting principle has been to remain as faithful as possible to the Convention text except where variation is necessary, and then while maintaining the integrity of the original text. This approach helps in the application of the Act which will be used by lawyers and judges from other countries who are called upon to interpret our law. In addition, the official Hague Report that accompanies the Convention and commentary from scholars will refer to language and provisions based on that in the Convention. Conforming language will facilitate this process and accord with the requirements under Article 23 of the Convention and Section 23 of the Act for interpretation that is uniform among states and member countries. Language consistency between the Convention, the federal implementing legislation, and the Act will also help insure uniform interpretation of important provisions.

            There are, however, areas that reflect the realities of the need for accessibility by judges and lawyers in this country who will not be familiar with international terms or concepts. In some cases the language has been modified to simplify the Convention for a common law tradition; in other cases where the language has been retained, detailed Reporter’s Notes call attention to the differences. For example, the concept of residence for entities other than natural persons is provided for in Article 4(2) of the Convention. In Section 7, detailed Reporter’s Notes supplement the terms such as “statutory seat” which may not be familiar to common law practitioners. The same is true in Section 18 (Article 12 in the Convention) which introduces the civil law concept of “judicial settlement.”

            There are also terms and phrases that have an international character or meaning and are not defined in the Convention or Act but have a shared meaning that is “autonomous” to the Convention or other like conventions and does not look first to national law. For example, “civil or commercial matter” has a recognized meaning in Hague Conventions. The phrases “manifestly incompatible with public policy” or “manifest injustice” are to be given an autonomous meaning, that is the reference is not merely to national (or in the US, often state) law.

            This form of implementation of an international convention through a uniform state law and federal statute provides the best mechanism for maintaining state law while meeting the needs for multilateral agreements that increasingly address areas that have been traditionally in the realm of state law. This Act, therefore, strives to maintain the integrity of both existing state law and the international treaty while providing accessible law for bar and bench domestically.

INTERNATIONAL CHOICE OF COURT AGREEMENTS ACT

            SECTION 1. SHORT TITLE. This [act] may be cited as the [International Choice of Court Agreements Act].

            SECTION 2. DEFINITIONS. In this [act]:

            (1) “Choice of court agreement” means an agreement between two or more persons, concluded or documented in a record, which designates the court or courts of one or more Contracting States for the purpose of deciding disputes that have arisen or may arise in connection with a particular legal relationship.

            (2) “Chosen court” means the court or courts within a Contracting State designated in an exclusive choice of court agreement.

            (3) “Contracting State” means a party to the Convention.

            (4) “Convention” means the Hague Convention of 30 June 2005 on Choice of Court Agreements.

            (5) “Country of origin” means the Contracting State in which the court of origin is located.

            (6) “Court of origin” means the court that granted the judgment.

            (7) “Exclusive choice of court agreement” means a choice of court agreement that designates the courts of one Contracting State or one or more specific courts of one Contracting State, to the exclusion of the jurisdiction of any other courts.

            (8) “International case”:

                        (A) for purposes of application of the provisions of this [act] relating to enforcement of a choice of court agreement, means any case other than a case in which:

                                    (i) all the parties reside [exclusively] in the same Contracting State; and

                                    (ii) the relationship of the parties and of all other elements relevant to the dispute, regardless of the location of the chosen court, are only with that Contracting State; or

                        (B) for purposes of application of the provisions of this [act] relating to recognition and enforcement of a judgment, means any case in which the judgment was rendered in a country other than the Contracting State in which recognition and enforcement is sought.

            (9) “Judgment” means a court decision on the merits, however denominated, including a decree or order, and also a determination of costs or expenses relating to a decision on the merits, that may be recognized or enforced under this [act]. The term does not include an interim measure of protection.

            (10) “Non-exclusive choice of court agreement” means a choice of court agreement that is not an exclusive choice of court agreement.

            (11) “Person” means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, public corporation, government or governmental subdivision, agency or instrumentality, or any other legal or commercial entity.

            (12) “Record” means information that is in writing or in any form of communication which renders the information accessible so that it may be used for subsequent reference.

            (13) “State,” except in the phrase “Contracting State,” means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States.

Reporters’ Notes

            1. Subsection (1) is based in part on the requirements of Article 3 of the Convention with regard to exclusive choice of court agreements. Under the Convention, an exclusive choice of court agreement must meet five requirements: (1) there must be an agreement between two or more parties; (2) the agreement must be “concluded or documented” in a record; (3) the agreement must designate the courts of one country or one or more specific courts in one country to the exclusion of all other courts; (4) the designated courts must be the courts of a Contracting State; and (5) the designation must be for the purpose of deciding disputes that have arisen or may arise in connection with a particular legal relationship. Report ¶93. The definition of “choice of court agreement” in this Act meets all of the requirements to be an exclusive choice of court agreement other than the requirement that the agreement must designate the courts, or one or more specific courts, of only one Contracting State. The definition of “choice of court agreement” is important in distinguishing between the exclusive choice of court agreements to which this Act normally applies and those nonexclusive choice of court agreements to which the Act applies between the United States and another Contracting State who has made a reciprocal declaration under Article 22 of the Convention. See section 15 of this Act.

            2. Subsection (2) defines the key term “chosen court.” Under section 8 of this Act, the chosen court, subject to certain exceptions, is the only court entitled to hear the case, and section 9 of this Act normally requires other courts to decline jurisdiction in favor of the chosen court. Further, under section 10 of this Act, other Contracting State courts, again subject to certain exceptions, must recognize a judgment rendered by the chosen court.

            3. Subsection (3) defines the term “Contracting State.” This is a standard term in treaty practice to refer to a country that has become a party to a convention. The Committee decided at its October 2009 meeting to use this term in lieu of the term “Contracting State” that appeared in earlier drafts. The definition of “Contracting State” accordingly has been deleted and all references to that term in the draft removed. Using the term “Contracting State” conforms the draft to the draft federal statute. The definition is identical to that found in the draft federal statute.

            It should be noted that, under Articles 29 and 30 of the Convention, a regional economic organization may in certain circumstances become a party to the Convention. The Report states that in that situation the term “Contracting State” “applies equally, where appropriate,” to the regional economic integration organization. Report, ¶316.

            4. Subsection (5) is based on the definition of “State of origin” in the Report, page 21. The defined term has been changed to “country of origin” in order to avoid confusion with the term “state,” which refers to a state of the United States.

            5. Subsection (6) is based on the definition of the same term in the Report, page 21, and closely follows that definition.

            6. Subsection (7) defines the key term “exclusive choice of court agreement.” That term is a crucial one in defining the scope of this Act under Section 4. Except with regard to choice of court agreements meeting the requirements of section 15 of this Act, this Act applies only to exclusive choice of court agreements. “Exclusive choice of court agreement” is defined in Article 3 of the Convention. Such agreements must meet five requirements: (1) there must be an agreement between two or more parties; (2) the agreement must be “concluded or documented” in a record; (3) the agreement must designate the courts of one country or one or more specific courts in one country to the exclusion of all other courts; (4) the designated courts must be the courts of a Contracting State; and (5) the designation must be for the purpose of deciding disputes that have arisen or may arise in connection with a particular legal relationship. Report ¶93. The combination of the definition of “choice of court agreement” in subsection 1 and the definition of “exclusive choice of court agreement” in subsection 7 meet these Convention requirements. Each of these requirements is discussed below.

            7. The first requirement for an exclusive choice of court agreement is that it must result from an agreement between two or more parties; it cannot be established unilaterally. The determination as to whether or not there is an agreement is left to state law other than this Act.

            In some instances, this Act designates which state’s law (including its choice of law rules) will apply to the determination of certain matters. Sections 8(b)(1), 9(1), and 11(1) direct the determination as to whether an agreement is “null and void” be determined under the law of the chosen court. Section 9(2)and (3) refer to the law of the court seized with regard to the issues of lack of capacity and public policy. Section 11 (2) and (6) refers to the law of the court asked to recognize a judgment with regard to determination of the issues of capacity and public policy, and section 11(4) refers to that law with regard to fundamental principles concerning service of documents.

            The fundamental question as to whether there was an agreement between the parties, however, is determined by the law of the court asked to apply this Act. The Report states that:

the Convention as a whole comes into operation only if there is a choice of court agreement, and this assumes that the basic factual requirements of consent exist. If, by any normal standards, these do not exist, a court would be entitled to assume that the Convention is not applicable, without having to consider foreign law.

Report ¶95.

The Report gives the following example:

X, who is resident in Panama, sends an unsolicited email to Y, who is resident in Mexico, making an offer on terms that are extremely unfavorable to Y. The offer contains a choice of court clause in favor of the courts of Ruritania . . . and concludes: “If you have not replied within seven days, you will be deemed to have accepted this offer” The email is deleted by Y’s anti-spam software and he never reads it. After seven days, X claims that there is a contract with a choice of court agreement, and brings proceedings in the courts of Ruritania. If, unlike the law of every other State in the world, the law of Ruritania considered that a contract existed and the choice of court “agreement” was valid, other States, including Mexico, would nevertheless be entitled to treat the choice of court agreement as non-existent.

Report ¶96.

            8. The second requirement for an exclusive choice of court agreement is the formal requirement that it must be “concluded or documented in a record.” A choice of court agreement is “concluded” in a record if a record of it exists at the time at which agreement is entered into. An agreement is “documented” in a record if, although the original agreement was oral, it subsequently was put into a record. See Report ¶113. For a discussion of “record,” see Reporters’ Note *** below.

            The requirement that the choice of agreement be “concluded or documented in a record” is both necessary and sufficient under this Act. A choice of court agreement is not covered by this Act if it does not meet this requirement; if the agreement does meet this requirement, no further requirements of a formal nature – for example, that the agreement be written in a particular type or be in a particular language – may be required. Report ¶110. Whether these formal requirements are met is, of course, a different question from whether there was mutual consent to the choice of court agreement.

            9. The third requirement for an exclusive choice of court agreement is that it must designate “the courts of only one Contracting State or one or more specific courts of only one Contracting State.” The designation of courts in only one Contracting State is the requirement that distinguishes and exclusive choice of court agreement from a non-exclusive choice of court agreement under this Act. If an agreement meeting the definition of “choice of court agreement” in this Act also designates courts located in only one Contracting State, then the choice of court agreement will be deemed to be exclusive unless the parties have expressly provided otherwise. See Report ¶102. Thus, a choice of court agreement designating “the Commercial Court of Paris or the Commercial Court of Lyon” would be an exclusive choice of court agreement because it designates courts of only one Contracting State (assuming France is a party to the Convention). On the other hand, a choice of court agreement designating “the Commercial Court of Paris or the Commercial Court of London to the exclusion of all other courts” would not be an exclusive choice of court agreement under this Act, even if both France and the United Kingdom are parties to the Convention, and even though the agreement expressly states it is exclusive, because the agreement designates the courts of more than one Contracting State. See Report ¶109.

            Under this requirement, an exclusive choice of court agreement may designate “the courts of only one Contracting State” in general, or it may designate “one or more specific courts of only one Contracting State.” A choice of court agreement designating “the courts of France,” a choice of court agreement designating “the Commercial Court of Paris,” and a choice of court agreement designating “either the Commercial Court of Paris or the Commercial Court of Lyons” all would meet this requirement to be an exclusive choice of court agreement. Report ¶¶103, 104. Similarly, a choice of court agreement designating “the courts of the United States” and one designating “the courts of New Jersey “ would both meet this requirement. Report ¶107.

            Implicit in the requirement that the parties have designated courts in only one Contracting State is the requirement that both parties be bound by that designation. Thus, a choice of court agreement that is drafted to be exclusive with regard to proceedings brought by one party but not with regard to proceedings brought by another party is not an exclusive choice of court agreement under this Act. For example, a choice of court clause in an international loan agreement providing “Proceedings by borrower against lender may be brought exclusively in the courts of Country Y; proceedings by the lender against the borrower may be brought in the courts of Country Y or in the courts of any other country having jurisdiction under its law” would not be an exclusive choice of court agreement under this Act because the choice of court designation is exclusive only with regard to the borrower. Report ¶¶105-106.  

            10. The fourth requirement for an exclusive choice of court agreement is that it must designate the courts of a Contracting State. This Act only applies to choice of court agreements designating the courts of a party to the Convention, and to recognition and enforcement of judgments rendered in a Contracting State. Whether a choice of court agreement designating the courts of a non-Contracting State will be enforced in this state, or a judgment rendered by a chosen court in a non-Contracting State will be recognized and enforced in this state is determined by the law of this state other than this Act. See Report ¶100.

            11. The fifth requirement for an exclusive choice of court agreement is that the designation of a court must be “for the purpose of deciding disputes that have arisen or may arise in connection with a particular legal relationship.” Subsection (1). The exclusive choice of court agreement may be limited to, or include disputes that have already arisen between the parties, or it may be limited to, or include, future disputes that may arise in connection with a particular relationship. Report ¶101.

            12. It should be noted that the parties to a choice of court agreement that otherwise would be an exclusive choice of court agreement under subsection (7) can avoid that result by expressly providing that the choice of court agreement is not exclusive. If the parties do not expressly so provide, however, then a choice of court agreement meeting the subsection (7) definition will be deemed to be exclusive under section 6 of this Act. For further discussion of this issue, see section 6.

            13. The definition of “international case” in subsection (8) is based on Article 1(2) and (3) of the Convention. It is a key term in defining the scope of this Act. Section 4 of this Act provides that this Act only applies to a choice of court agreement in an international case.

NOTE: THE BRACKETS AROUND “EXCLUSIVELY” WERE ADDED BECAUSE THE STATE DEPARTMENT IS STILL CONSIDERING THE APPROPRIATE TREATMENT OF MULTI-RESIDENCE CASES. The change from “resident of” to “reside in” was made to conform to the federal statute.

            What constitutes an international case depends on the purpose for which the determination is being made. Subsection (8) defines the term differently depending upon whether the purpose is enforcement of the choice of court agreement or recognition and enforcement of a judgment.

            If the determination is being made as to whether enforcement of a choice of court agreement comes within this Act, then a case is an “international case” unless the parties are all resident in one Contracting State and all relevant elements other than the location of the chosen court are connected only with that Contracting State. Report ¶11. In other words, if a case is wholly domestic, the choice of a court in another Contracting State in the choice of court agreement does not make it international. Report ¶11. On the other hand, the provisions of the Act dealing with enforcement of the choice of court agreement will apply if either all the parties are not exclusively residents of one Contracting State or there is some other element relevant to the dispute besides the chosen court that has a connection with some other Contracting State. Report ¶41.

            If, however, the determination is being made as to whether recognition and enforcement of a judgment comes within the Act, then a case is an “international case” if the judgment was rendered by the court of a Contracting State other than the Contracting State asked to recognize and enforce it. Report ¶11. This means that a case that would not be an international case for purposes of enforcement of the choice of court agreement because the only “foreign” element is the chosen court could be an international case for purposes of recognition and enforcement in another Contracting State of a judgment issued by the chosen court. Report ¶11.

            The application of the two definitions of “international case” is illustrated by the following examples:

            Example 1: A and B enter a commercial contract that contains an exclusive choice of court provision choosing the California courts to resolve disputes arising under the contract. Both A and B are exclusively residents of Mexico. All relevant elements other than the chosen court relate only to Mexico. When a dispute under the contract subsequently arises, A sues B in a state court in California. Assume both the United States and Mexico are member countries and that California has adopted this Act. B argues that the California court should dismiss the case despite the choice of court agreement on the basis of forum non conveniens. A argues that section 8 of this Act requires the California court to hear the case without regard to the doctrine of forum non conveniens. Section 8 does not apply because the case is not an international case for purposes of the provisions of this Act relating to enforcement of the exclusive choice of court agreement. Whether the California court will dismiss the case will be determined by state law other than this Act. See Report ¶42.

            Example 2: A and B enter a commercial contract that contains an exclusive choice of court provision choosing the courts of Mexico to resolve disputes arising under the contract. Both A and B are exclusively residents of the United States. All relevant elements other than the chosen court relate only to the United States. Assume both the United States and Mexico are member countries and that California has adopted this Act. When a dispute under the contract subsequently arises, A sues B in state court in California. B argues that section 9 of this Act requires the California court to suspend or dismiss the proceedings because of the choice of the Mexican courts in the exclusive choice of court agreement. Section 9 does not apply because the case will not be considered an international case for purposes of the provisions in this Act relating to enforcement of a choice of court agreement. Whether the California court will dismiss the case on the basis of the choice of court agreement will be determined by state law other than this Act. See Report ¶42.

            Example 3: Assume in Example 2 that, instead of suing B in California, A sues B in the chosen court in Mexico and obtains a judgment against B. A then seeks recognition of the judgment in a California court. Although both parties are U.S. residents and all other relevant elements other than the chosen court relate only to the United States, this Act will apply to the California court’s obligation to recognize the Mexican judgment. The case is an international case for purposes of this Act’s provisions regarding recognition and enforcement because it was rendered by a court of another Contracting State. See Report ¶46.

            14. The definition of “judgment” in subsection (9) is based on Article 4(1) of the Convention. This term is important in determining what judicial decrees are entitled to recognition and enforcement under this Act. “Judgment” is defined broadly to cover any decision on the merits, regardless of what it is called. It would include, for example, a decision issued by a patent office exercising quasi-judicial functions. Report ¶116, n.146. The definition also covers an order as to costs or expenses if that order relates to a judgment that may be recognized or enforced under this Act, whether that order is issued by an office of the court or be a judge. Report ¶116.

            The definition, however, requires that the decision be “on the merits.” It thus excludes a purely procedural ruling, as well as rulings relating to interim measures of protection, as these are not decisions on the merits. Report ¶116. Interim measures of protection are expressly excluded from the scope of this Act under section 4(g).

NOTE: THE STYLE COMMITTEE HAS SUGGESTED THAT THE DEFINITION OF “INTERNATIONAL CASE” BE DELETED AND ITS SUBSTANCE MOVED TO SECTION 4 AS IT IS ONLY USED IN THAT SECTION. THIS WILL TAKE THE ACT OUT OF ITS CURRENT CONFORMITY WITH THE FEDERAL STATUTE ON THIS ISSUE.

            15. Subsection (10) defines “non-exclusive choice of court agreement.” This definition is important for application of Article 22 of the Convention. The Report states that a non-exclusive choice of court agreement under Article 22 must satisfy four requirements: (1) it must be in the form required by Article 3(c) of the Convention (that is, it must be, in the language of the Act, “concluded or documented” in a record); (2) the parties must have consented to it (that is, it must be an “agreement”); (3) the chosen court must be designated for the purpose of deciding disputes that have arisen or may arise in connection with a particular legal relationship; and (4) the agreement must designate a court or the courts of one or more member countries. Report ¶242. For purposes of this Act, this means that a non-exclusive choice of court agreement must meet the requirements of subsection (1) defining “choice of court agreement,” but not meet the additional requirements of subsection (6) defining “exclusive choice of court agreement.” NOTE: The references in text to those subsections have been removed at the behest of the Style Committee.

            16. Subsection (11) is the standard ULC definition of “person.” The term is used, but not defined, in the Convention.

            17. Subsection (12) is based on Article 3(c) of the Convention, and is important to the definition of the choice of court agreements that are included within this Act. Only choice of court agreements that meet the formal requirement of being “concluded or documented in a record” are within the scope of this Act. See subsections (1) and (7) and section 4 of this Act. The Report states that the wording of the comparable Convention provision in Article 3© was “inspired by Art. 6(1) of the UNCITRAL Model Law on Electronic Commerce 1996.” Report ¶112, n.144. The definition of “record” in this Act, although not stated in the exact wording of the ULC standard definition of “record,” is intended to have a comparable meaning.

NOTE: THE STYLE COMMITTEE HAS SUGGESTION THIS DEFINITION SHOULD BE DELETED AND ITS SUBSTANCE PLACED IN THE DEFINITION OF “CHOICE OF COURT AGREEMENT” AS THE ONLY PLACE IN TEXT WHERE IT IS USED. THIS WOULD TAKE THE DRAFT OUT OF CONFORMITY WITH THE FEDERAL STATUTE BOTH WITH REGARD TO THIS DEFINITION AND THAT OF “CHOICE OF COURT AGREEMENT.”

            The definition of “record” does not require that the choice of court agreement be signed, although lack of a signature may make it more difficult to prove the existence of the agreement. Report ¶112. If a choice of court agreement is not in writing, then the definition requires that it be “in any form of communication which renders the information accessible so that it may be used for subsequent reference.” This language is intended to cover all normal electronic means of data transmission or storage, such as email and fax, provided that the data is retrievable so that it can be referred to and understood on future occasions. Report ¶112. For discussion of the phrase “concluded or documented,” see Reporters’ Note **** above.

            18. Subsection (13) is the standard ULC definition of “state.”

NOTE: THIS DEFINITION DIFFERS SOMEWHAT FROM THE DEFINITION IN THE FEDERAL STATUTE IN LANGUAGE, ALTHOUGH THE SUBSTANCE APPEARS TO BE THE SAME.

QUERY: The federal draft defines “court” as follows:

“Court” means any body, however named, authorized by a Contracting State to exercise judicial functions and acting in that capacity.

Should the uniform act define the term “court” as well?

QUERY: Does the definition of “judgment” in the draft adequately capture the intent of the Convention? The Convention says “any decision on the merits given by a court, whatever it may be called, including a decree or order... .” The Report confirms that the term “judgment” is intended to be “widely defined so as to cover any decision on the merits, regardless of what it is called, including a default judgment,” but also states that “[i]t would cover a decision by a patent office exercising quasi-judicial functions.” Report ¶116 & n.146. The example of a decision by a patent office suggests that the “whatever it may be called” language in the Convention may qualify the word “court,” not “judgment,” or, at least that decisions of quasi-judicial bodies as well as those of purely judicial “courts” were intended to be included.

The federal statute seems to adopt this interpretation in its definition of “court” as “any body, however named, authorized by a Contracting State to exercise judicial functions and acting in that capacity.”

The definition of “judgment” in the Act says “court decision on the merits, however dominated, including a decree or order” which could suggest the decision has to be that of a purely judicial body, thus excluding decisions by quasi-judicial entities. (The federal statute does not include the phrase “however denominated” in its definition of “judgment,” a definition otherwise identical to that in the Act. )

The Committee briefly considered this issue at its October 2009 drafting committee meeting and decided not to alter the definition of “judgment.” WOULD THE DRAFTING COMMITTEE BE INTERESTED IN REVISITING THIS ISSUE WITH MORE INPUT FROM THE FEDERAL DRAFT PARTICIPANTS ON THE COMMITTEE?

QUERY: The Style Committee suggests that the term “recognition” be defined. Would defining “recognition” be useful? If so, should “enforcement” be defined as well?

            SECTION 3. IMPLEMENTATION OF CONVENTION. This [act] implements in this state the Hague Convention of 30 June 2005 on Choice of Court Agreements. [This [act] provides state law for implementation of the Hague Convention of 30 June 2005.]

Reporters’ Notes

1. The language of this section is that suggested by the Style Committee. The bracketed language is that suggested by the Committee at its October 2009 drafting committee meeting.

WHICH LANGUAGE DOES THE COMMITTEE PREFER?

2. This section was moved to follow the definitions section at the suggestion of the Style Committee.

            SECTION 4. SCOPE.

            (a) Except as otherwise provided in this section, this [act] applies to:

                        (1) an exclusive choice of court agreement in an international case involving a civil or commercial matter [or a judgment of another Contracting State resulting from such an exclusive choice of court agreement]; and

                        (2) [a judgment of another Contracting State resulting from] a non-exclusive choice of court agreement in an international case involving a civil or commercial matter to the extent provided in Section 15.

            (b) This [act] does not apply to an exclusive choice of court agreement if:

                        (1) any party to the agreement is an individual acting primarily for personal, family, or household purposes; or

                        (2) the agreement relates [primarily] to an individual or collective contract of employment.

            (c) Subject to subsection (d), this [act] does not apply to the following matters:

                        (1) the status and legal capacity of an individual;

                        (2) family law matters, including matters relating to divorce, support, maintenance, property division, child custody, and other rights and obligations arising out of marriage or a similar relationship;

                        (3) wills, succession, and administration of estates;

                        (4) bankruptcy and insolvency matters;

                        (5) the carriage of passengers or goods;

                        (6) marine pollution, limitation of liability for maritime claims, general average, and emergency towage and salvage;

                        (7) antitrust matters;

                        (8) liability for nuclear damage;

                        (9) claims for personal injury, wrongful death, and survival brought by or on behalf of individuals;

                        (10) tort claims for damage to real property and tangible personal property which do not arise from a contractual relationship;

                        (11) interests in real property, including leasehold interests;

                        (12) the validity, nullity, or dissolution of persons other than individuals, and the validity of the internal governance decisions of their governing authorities;

                        (13) the validity of intellectual property rights other than copyright and related rights;

                        (14) infringement of intellectual property rights other than copyright and related rights, except when infringement proceedings are brought for breach of a contract between the parties relating to such rights or could have been brought for breach of that contract;

                        (15) the validity of entries in public registers; and

                        (16) a matter under the law of a Contracting State which is analogous to those listed in this subsection.

            (d) A proceeding involving a determination relating to a matter listed in subsection (c) is not excluded from the scope of this [act] if that determination is of a question preliminary to, or asserted as a defense in connection with, a determination relating to a non-excluded matter that is an object of the proceeding.

            (e) This [act] does not apply to arbitration and related proceedings.

            (f) A proceeding is not excluded from the scope of this [act] merely because a government or governmental agency, or other person acting for a government, is a party to the proceeding.

            (g) This [act] does not affect the privileges and immunities of governments or international organizations in respect of themselves and their property.

            (h) This [act] does not apply to an interim measure of protection. This [act] neither requires nor precludes the grant, refusal, or termination of an interim measure of protection by a court of this state and does not affect whether a party may request or a court of this state should grant, refuse, or terminate such a measure.

            (i) A proceeding under a contract of insurance or reinsurance is not excluded from the scope of this [act] on the ground that the contract of insurance or reinsurance relates to a matter to which this [act] does not apply.

            (j) [Where the United States has made a declaration under Article 21 of the Convention that it will not apply the Convention to specific matters, the specific matters identified in the declaration are excluded from the scope of this [act].]

            (k) Where another Contracting State has made a declaration under Article 21 of the Convention that it will not apply the Convention to specific matters, this [act] shall not apply to the specific matters identified in the declaration with regard to that Contracting State.

Reporters’ Notes

            1. Subsection (a) excludes non-civil matters, including public law and criminal law matters. The Convention uses the phrase “civil or commercial” law matters because these two categories are regarded as separate and mutually exclusive categories in some legal systems. Art. 1 (1); Report, ¶49. This Act also uses that phrase for the same reason. In the U.S., a commercial matter would be a subset of civil matters.

            With regard to determination of the meaning of these terms, the Report states that “[l]ike other concepts used in the Convention, ‘civil or commercial matters’ has an autonomous meaning: it does not entail a reference to national law or other instruments.” Report ¶49. The phrase “civil or commercial matter” appears in other Hague Conference conventions and thus has a specific meaning in the international context. See, e.g., 1965 Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters; 1970 Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters.

NOTE: THE BRACKETED LANGUAGE IN SUBSECTION (A) IS FOUND IN THE FEDERAL STATUTE. THE REPORTERS’ SUGGEST IT BE INCLUDED IN THE ACT.

            2. Subsection (b)(1) excludes choice of court agreements when any of the parties to the agreement is a consumer. It covers both an agreement between a consumer and a nonconsumer, and one between two consumers. Art. 2(1)(a); Report ¶50. The phrase “an individual acting primarily for personal, family, or household purposes “ is a common way in which to describe a consumer. Cf.. Uniform Commercial Code §9-102(23)-(26) (utilizing this phrase in connection with various consumer-related definitions).

            3. Subsection (b)(2) excludes all choice of court agreements in employment contracts, whether an individual contract between an employer and an employee or a collective contract of employment between an employer and a group of employees or an organization such as a labor union representing employees. Art. 2(1)b); Report ¶ 51.

NOTE: THE BRACKETED WORD “PRIMARILY” IS NOT FOUND IN THE COMPARABLE PROVISION OF EITHER THE FEDERAL STATUTE OR THE CONVENTION. THE REPORTERS’ SUGGEST THE WORD BE DELETED FROM THE ACT.

            4. Subsections (c) and (d) are based on Article 2(2) & (3), which exclude proceedings involving certain subject matter from the scope of the Convention, but only when the matter is “an object (the subject or one of the subjects) of the proceedings,” rather than “a preliminary question in proceedings that have some other matter as their object/subject.” Report ¶52. Articles 2(3) expressly states that “the mere fact that a matter excluded under paragraph 2 arises by way of defense does not exclude proceedings from the Convention, if that matter is not an object of the proceedings.”

            The application of this distinction is illustrated by the following examples:

            Example 1: A and B enter a contract that contains an exclusive choice of court provision. A sues B for breach of contract. B asserts by way of defense that the contract is void because it violates the antitrust laws. Although subsection (c)(7) excludes antitrust from the subject matter covered by this Act, the dispute between A and B would be within the scope of this Act. The primary object of the action is to determine the breach of contract claim asserted by A. The principal issue before the court is whether judgment should be given against B for breach of contract. That antitrust issue is merely a defense to B’s liability which must be determined as a preliminary question to deciding the primary object of the action, whether A is entitled to recover from B for breach of contract. See Report ¶63.

            Example 2: Licensor licenses patent rights to licensee under a license that contains an exclusive choice of court agreement. Subsequently, licensee stops making the royalty payments required under the license. Licensor brings an action under the license to recover the unpaid royalties. Licensee asserts that licensor’s patent is invalid as a defense to payment. Although subsection (c)(13) excludes issues relating to the validity of a patent from the subject matter covered by this Act, the dispute between Licensor and Licensee is within the scope of this Act. The principle issue before the court is whether Licensor can recover its unpaid royalties under the license. Although the court must decide whether Licensor’s patent is valid before it can make that determination, the issue of patent validity is merely a preliminary question to deciding the issue of Licensor’s right to its royalties under the license. See Report ¶77.

            5. Subject matter under subsection is excluded for various reasons. In some cases, the parties may not have the right to dispose of the matter for themselves because the public interest or that of third parties is involved. In those cases, a particular court often will have exclusive jurisdiction that cannot be ousted by a choice of court agreement. In other cases, other multilateral legal regimes apply and thus the Convention is not needed. Further, exclusion of these areas removes the need to resolve questions of conflict between the Convention and these other regimes. Report ¶53.

            6. Subsection (c)(1) is based on Article 2(2)(a) of the Convention. The language is almost identical. It excludes issues dealing with status and capacity of natural persons. The Report states that the Convention’s comparable exclusion “includes proceedings for divorce, annulment of marriage or the affiliation of children.” Report ¶54.

            7. Subsection (c)(2) is based on Article 2(2)(b) & (c).It includes language from a similar exclusion in Section (b)(3) of the UFCMJRA. The Convention uses the phrase “maintenance obligations,” which is intended to include child support. Art. 2(2)(b); Report ¶55. The Act expressly lists “support,” which would include spousal and child support. The Convention uses the phrase “matrimonial property regimes,” which includes “the special rights that a spouse has to the matrimonial home in some jurisdictions.” Report ¶55. The Act uses the phrase “property division.”

            The phrase “similar relationships” covers relationships between unmarried couples that are given legal recognition. Report ¶55.

            8. Subsection (c)(3) excludes matters relating to succession. Art. 2(2)(d); Report ¶55. The language “and administration of estates” is not included in the Convention, but is presumably intended to be covered by the Convention term “succession.”

            9. Subsection (c)(4) is based on Convention Article 2(2)(e), which excludes “insolvency, composition, and analogous matters.” The Convention term “composition” is intended to refer to procedures pursuant to which the debtor can enter an agreement with creditors “in respect of a moratorium on the payment of debts or on the discharge of those debts.” Report ¶56. The Convention phrase “analogous matters” “covers a broad range of other methods whereby insolvent persons or entities can be assisted to regain solvency while continuing to trade, such as Chapter 11 of the United States Federal Bankruptcy Code.” Report ¶56. This phrase is left out of the Act because the Drafting Committee decided at its November 2008 meeting to include a separate subsection (c)(16) stating that matters under Contracting State laws analogous to those listed in subsection © also are excluded. The term “composition” is left out of the Act as a term that would not convey the intended meaning under U.S. law. The term “bankruptcy” is added, and would cover Chapter 11 proceedings.

            10. The Report states that the Convention’s insolvency exclusion excludes proceedings from the scope of the Convention “if they directly concern insolvency.” Report ¶57. The Report gives the following hypothetical to explain the scope of the exclusion:

A (resident in State X) and B (resident in State Y) enter into a contract under which B owes A a sum of money. The contract contains a choice of court agreement in favor of the courts of State Z. A is then declared bankrupt as a result of proceedings in State X. The Convention would apply to any proceedings against B to recover the debt, even if they were brought by the person appointed to administer A’s bankrupt estate: provided that the appointment under the insolvency law of State X is recognized in State Z, that person would be standing in the shoes of A and would be bound by the choice of court agreement. However, the Convention would not apply to questions concerning the administration of the bankrupt estate – for example, the ranking of different creditors.

            11. Subsection (c)(5) is the same as Convention Article 2(2)(f), which excludes contracts for the national and international carriage of passengers and goods by land, sea, air or any combination of the three. Report ¶58. This exclusion avoids the possibility of conflict with other conventions, such as the Hague Rules on Bills of Lading, which deal with aspects of this area.

            12. Subsection (c)(6) excludes five specific maritime matters – marine pollution; limitation of liability for maritime claims; general average; emergency towage; and emergency salvage. Art. 2(2)(g); Report ¶59. Other maritime matters, such as marine insurance, non-emergency towage and salvage, shipbuilding and ship mortgages and liens, are included. Report ¶59.

            13. Subsection (c)(7) excludes antitrust law matters. The Convention version of this exclusion refers to “anti-trust (competition) matters” to take into account the fact different terms are used in different legal systems to refer to similar laws – what the U.S. refers to as antitrust law is called “competition law” in Europe. Art. 2(2)(h); Report ¶60. The exclusion is not intended to cover unfair competition law, such as that relating to misleading advertising or passing goods off as those of a competitor – presumably what would be referred to as unfair trade practices in the United States. Report ¶60.

            14. The language of subsection (c)(8) is identical to the Convention language regarding exclusion of liability for nuclear damage. Art. 2(2)(I). Liability for nuclear damage is excluded because it is the subject of other conventions and because in some states, like the United States, that are not a party to a nuclear liability convention, a comprehensive scheme under internal law exists that requires a single collective procedure in order to have a uniform solution with regard to liability and an equitable distribution of a limited fund among those injured. Report ¶64.

            15. The language of subsection (c)(9) is based on the Convention language regarding exclusion of personal injury claims. Art. 2(2)(j). As the Report states, choice of court agreements are likely to be rare in this tort context. Report ¶65. The Report indicates that the exclusion is intended to cover not only physical injury but “nervous shock” – presumably what U.S. tort law would call “emotional distress” – even if not accompanied by physical injury. Report ¶65. The exclusion does not, however cover “humiliation or hurt feelings” such as those related to an invasion of privacy or defamation. Report ¶65. Subsection (c)(9) specifically references wrongful death and survival claims to make clear these are included.

            16. The language of subsection (c)(10) is largely based on the Convention language. The Convention refers to “tort or delict claims” rather than just tort claims. Art. 2(2)(k). “Delict” is the civil-law concept analogous to “tort” in common law legal systems. Report ¶66, n. 95. Only tort claims for damage to tangible property that do not arise from a contractual relationship are excluded. Report ¶66.

            17. The comparable exclusion in the Convention to the exclusion in subsection (c)(11) excludes “rights in rem in immovable property, and tenancies of immovable property” Art. 2(2)(l). The Convention does not define either “immovable property” or “rights in rem,” leaving the definition of those terms to the internal law of each country. Brand & Herrup, page 66. The language of subsection (c)(11) defines an “immovable” as “real property” and defines “rights in rem” as “interests in real property.”

            18. The exclusion in subsection (c)(11) reflects the fact that, as a matter of territorial sovereignty, a country in which real property is situated customarily asserts exclusive jurisdiction to determine who has interests in that real property; an order from a foreign court purporting to determine these matters likely would not be given effect in the country in which the real property is located as an intrusion on territorial sovereignty. See Brand & Herrup, page 66.

            19. The Report states that “[t]he reference to rights in rem should be interpreted as relating only to proceedings concerning ownership of, or other rights in rem in, the immovable, not proceedings about immovables which do not have as their object/subject a right in rem. Thus, it would not cover proceedings for damage to an immovable ... nor would it cover a claim for damages for breach of a contract for the sale of land.” Report ¶67.

            20. The Convention exclusion refers to “tenancies in immovables,” a concept the definition of which, like that of “immovables,” is left to internal law. Brand & Herrup, page 66. Subsection (c)(11) defines this term as “leasehold interests.”

            21. The Report states two reasons for this exception: (1) in some countries “tenancies in immovables” are subject to special legislation designed to protect the tenant and (2) in some jurisdictions tenancies are considered rights in rem that would be covered under the first part of the exclusion so all tenancies were included to provide consistent treatment without regard to their characterization under a particular country’s internal law. Report ¶68.

            22. Only proceedings directly involving “immovables” are excluded. For example, a proceeding concerning rights and obligations of a seller and buyer under a contract for sale of a business would not be excluded, even if the sale includes an undertaking to transfer a lease of the business premises because the “immovables” issue would be involved only indirectly. Report ¶69. On the other hand, a proceeding between a landlord and tenant on the terms of the lease would be excluded. Report ¶69.

            23. The language of subsection (c)(12) is substantively the same as the language of Article 2(2)(m) of the Convention, but has been rephrased using terminology more consistent with that used in U.S. law . These matters were excluded because they often involve the rights of third parties and in some countries are decided by courts that have exclusive jurisdiction with regard to these issues. Report ¶70. As a general rule, a legal person comes into being because of action of a particular territorial sovereign, its powers as a legal person are demarcated by the rules of that territorial sovereign, and it passes out of existence in accordance with rules established by that sovereign. Brand & Herrup, page 67. The matters excepted by subsection (c)(12) thus are traditionally matters of exclusive jurisdiction of the state that created the legal person. Brand & Herrup, page 67.

            24. The exclusion in subsection (c)(12) is focused on matters relating to the internal structure and operation of the legal person, and does not necessarily apply to the consequences of decisions made by the legal person. Brand & Herrup, page 67.

            25. The language of subsection (c)(13) is the same as the language of Article 2(2)(n) of the Convention. Subsection (c)(13) excludes the issue of validity of intellectual property rights, other than copyright and related matters. Thus, proceedings to revoke or for a declaration of validity or invalidity of the excluded intellectual property rights are outside the scope of this Act. Report ¶75. On the other hand, copyright and related rights are fully covered by this Act, including with regard to proceedings to determine the validity of such rights. Report ¶72.

            26. The term “related rights” in subsection (c)(13) refers to “rights in a specific use of an existing work by someone other than the original author, and which use makes an additional contribution to the existing work.” Brand & Herrup, page 68. For example, the writing of a song gives rise to a right in copyright, while the rights a singer may have in a particular rendition of the song is a ‘related right” under this Act. Brand & Herrup, page 68. “Related rights” include rights of performers in their performances, rights of producers of sound recordings in their recordings, and rights of broadcasting organizations in their radio and television broadcasts. Report ¶73.

            27. The exclusion under subsection (c)(13) only applies when the validity issue is an object of the proceeding. When validity is raised merely as a preliminary matter rather than as an object of the litigation, then the exclusion does not apply. Thus, proceedings to enforce a licensing agreement with regard to a non-copyright intellectual property right would not be outside the scope of this Act just because the defendant raises the invalidity of the intellectual property right as a defense. Report ¶¶75 & 77.

            On the other hand, if instead of raising invalidity as a defense, the defendant counterclaimed for revocation of the intellectual property right, that counterclaim would be excluded under subsection (c)(13) because an object of the counterclaim would be to determine the validity of the right. Report ¶78. The fact the counterclaim was outside the scope of this Act, however, would not alter the fact that the plaintiff’s claim for enforcement of the license would be within this Act. Report ¶78.

            28. This Act applies to contracts dealing with intellectual property rights, such as licensing agreements, distribution agreements, joint venture agreements, agency agreements, and agreements for the development of an intellectual property right. Report ¶76. Proceedings brought under such contracts – for example, proceedings for payment of royalties owed under a licensing agreement – are covered by this Act. Report ¶76

            29. The language of subsection (c)(14) is identical to the language of Article 2(2)(o) of the Convention. As with the exclusion in subsection (c)(13), the exclusion applies only with regard to intellectual property rights other than “copyright and related rights.” For a discussion of the meaning of “related rights,” see note 23. In addition, the exclusion applies only when the infringement action could not have been brought as an action for breach of contract, whether or not it in fact was brought as a contract action. This latter condition greatly limits the scope of this exclusion. The only situations in which subsection (c)(13) will exclude subject matter from this Act are those in which the exclusive choice of court agreement applies to infringements that do not constitute a breach of the contract in which the exclusive choice of court agreement is contained or of any other contract between the parties, or where the parties concluded a choice of court agreement relating to an infringement that had already arisen and that was not related to any contract between the parties; such agreements will be rare. Report ¶79, n.109.

            30. The language of subsection (c)(15) is identical to the language of Article 2(2)(p) of the Convention. Traditionally, the state that creates and maintains a public register has exclusive jurisdiction over proceedings concerning the validity of entries in that public register as an aspect of territorial sovereignty. Brand & Herrup, page 70. Therefore, issues relating to the validity of entries in public registers have been excluded from the scope of this Act.

            31. Subsection (c)(16) excludes from the scope of the Act matters that under the law of a Contracting State are analogous to those listed in subsection (c) in recognition of the fact different terms may be used to describe similar concepts in the legal systems of the various member countries.

            32. Subsection (e) excludes arbitration and related proceedings from the scope of this Act. This exclusion is intended to be interpreted broadly, and covers any proceedings in which the court gives assistance to the arbitral process, including deciding whether an arbitration agreement is valid; ordering parties to proceed to, or discontinue, arbitration proceedings; revoking, amending, recognizing, or enforcing arbitral awards; appointing or dismissing arbitrators; fixing the place of arbitration; or extending the time for making awards. Report ¶84. There currently is a functioning international regime with regard to arbitral proceedings, including the United Nations Convention on the Recognition and Enforcement of Arbitral Awards, and this Act is not intended to disturb that regime. Brand & Herrup, page 73. Once arbitration or related proceedings are raised in a case, the case falls outside the scope of this Act. See Brand & Herrup, page 73-74.

            33. Subsection (f) is based on Article 2(5) of the Convention.

            34. Subsection (g) is based on Article 2(6) of the Convention. This material, formerly included in subsection (f), has been placed in a separate subsection to conform to the federal statute.

            35. Subsection (h) is based on Article 7 of the Convention.

            36. Subsection (I) is based on Article 17(1) of the Convention.

            37. Subsections (j) and (k) are new in this draft. The Committee decided at is November 2008 meeting that no declarations should be made at this time under Article 21, which allows a country to add to the subject matters excluded from coverage by declaration when the country has a strong interest in not applying the Convention to a specific matter. Nevertheless, because the United States has not made a final determination on this matter, and because declarations might arise in the future, the Committee decided at its October 2009 meeting to add provisions addressing the Article 21 issue. These provisions are based on the similar provisions in the federal statute.

            SECTION 5. EXCLUSIVE CHOICE OF COURT AGREEMENT AS INDEPENDENT AGREEMENT. An exclusive choice of court agreement that forms part of a contract must be treated as [is] independent of the other terms of the contract. The validity of the choice of court agreement cannot [may not] be contested solely on the ground that the contract is not valid.

Reporters’ Notes

            1. This section is based on Article 3(d) of the Convention. The bracketed language contains Style Committee suggestions. The current language is almost identical to the comparable federal statute language.

            2. This section provides that an exclusive choice of court agreement contained as a provision in a broader contract must be treated as an agreement that is independent of the other terms of the contract. Thus, the validity of the exclusive choice of court agreement cannot be contested solely on the ground that the contract of which it forms a part is not valid. Instead, the validity of the choice of court agreement must be determined independently according to the criteria set out in this Act. See e.g., sections 8, 9 and 11; Report ¶115. Therefore, it is possible for the chosen court to hold the contract invalid without depriving the choice of court agreement of validity. Of course, it is also possible that the ground on which the chosen court renders a contract invalid is a ground that also renders the choice of court agreement invalid under this Act. Report ¶115.

            SECTION 6. WHEN CHOICE OF COURT AGREEMENT DEEMED EXCLUSIVE. A choice of court agreement that designates the courts of a Contracting State or one or more specific courts of a Contracting State shall be deemed to be exclusive unless the parties have expressly provided otherwise.

Reporters’ Notes

            1. This section is based on Article 3(b) of the Convention. At its October 2009 meeting, the Committee decided to conform the language of this provision to the draft federal statute language. The language changes reflect this decision.

            2. This section reverses the law in the United States pursuant to which a choice of court agreement is presumed to be nonexclusive unless it expressly states that it is exclusive. Instead, a choice of court agreement that designates courts in only one Contracting State is deemed exclusive unless the parties expressly provide that the choice of court agreement is not exclusive. Thus, the following choice of court agreements would be deemed exclusive under this Act although they do not expressly state that they are exclusive:

“The courts of Mexico shall have jurisdiction to hear proceedings under this contract.”

            “Proceedings under this contract may be brought before the courts of Mexico”

See Report ¶108. On the other hand, the following choice of court agreements would be considered nonexclusive because they expressly provide that the agreement is not exclusive:

            “The courts of Mexico shall have non-exclusive jurisdiction to hear proceedings under this contract.”

            “Proceedings under this contract may be brought before the courts of Mexico, but this shall not preclude proceedings before the courts of any other country having jurisdiction under its law.”

See Report ¶109.

            SECTION 7. RESIDENCE OF AN ORGANIZATION. For purposes of this [act], a person other than an individual is considered to be a resident of any country:

            (1) where it has its statutory seat;

            (2) under the law of which it was incorporated or formed;

            (3) where it has its central administration; or

            (4) where it has its principal place of business.

Reporters’ Notes

            1. Section 7 is based on Article 4(2) of the Convention. Conditions (1), (3) and (4) also are used in the EU Regulation, Article 60.

            2. Section 7 defines “residence” for entities other than natural persons. The concept of “residence” is important with regard to determining whether a case is an “international case” for purposes of determining the scope of application of this Act, as well as with regard to certain exceptions to recognition and enforcement. Report ¶118. The section states four possible residences for an organization, and it is possible for an organization to have a residence in more than one location, or even in all four locations. Brand & Herrup, page 51.

            3. “Statutory seat” (“siège statutaire”) is a civil law concept used in some civil law jurisdictions to determine the residence of organizations. The Report explains this concept as follows:

[T]his term does not refer to the corporation’s seat as laid down by some statute (legislation) but as laid down by the statut, the document containing the constitution of the company – for example, the articles of association. In the common law, the nearest equivalent is “registered office.” In practice, the State where the corporation has its statutory seat will almost always be the State under whose law it was incorporated or formed; while the State where it has its central administration will usually be that in which it has its principal place of business.

Report ¶123.

            4. The Report states that “[a] State or a public authority of a State would be resident only in the territory of that State.” Report ¶117 n. 148.

            5. The Committee decided at its November 2008 meeting to adopt the ULC definition of “person” rather than the Convention language “an entity or person other than a natural person.”

            SECTION 8. DUTY OF CHOSEN COURT TO ACCEPT JURISDICTION.

            (a) Except as otherwise provided in this section, a chosen court of this state shall accept jurisdiction over the dispute.

            (b) A chosen court of this state shall refuse to accept jurisdiction to decide a dispute to which an exclusive choice of court agreement applies if:

                        (1) the exclusive choice of court agreement is null and void under the law of this state; or

(2) assumption of jurisdiction by the chosen court would violate:

                                    (A) jurisdictional limits placed on the chosen court by this state relating to subject matter or value of the claim; or

                                    (B) rules of this state regarding internal allocation of jurisdiction among its courts.

            [(c) A chosen court of this state does not have subject matter jurisdiction if, except for the choice of that court, there is no relationship between this state and the parties or the dispute.]

            (d) A chosen court may not decline to exercise jurisdiction over a dispute under the doctrine of forum non conviens or otherwise because the dispute should be decided in the courts of another state or country.

            (e) A chosen court may transfer a case to another court pursuant to a law of this state permitting the transfer. In determining a discretionary transfer, the court shall give due consideration to the choice of court of the parties.

Reporters’ Notes

            1. Section 8 is based on Article 5 of the Convention.

            2. Subsection (a) sets out one of the key provisions of this Act. It establishes the basic duty of a court of this state designated by the parties to an exclusive choice of court agreement covered by this Act to enforce the parties’ exclusive choice of court agreement by accepting jurisdiction over the dispute. An exclusive choice of court agreement would be of little value if the chosen court were not obligated to hear the case when proceedings were brought before it. See Report §124.

            3. Subsection (a) is based upon Article 5(1) of the Convention, which states that the chosen court “shall have jurisdiction” to decide the dispute. Subsection (a) instead states that the chosen court “shall accept jurisdiction” over the dispute. It is clear that Article 5 of the Convention does not seek to create subject matter jurisdiction in a chosen court that does not already exist. See Article 5(3) (rules related to subject matter jurisdiction not affected). The language of subsection (a) is used instead of the Convention language to avoid confusion regarding that issue.

            4. Subsection (b) is based on Article 5(1) and (3) of the Convention. It sets out the three exceptions to the obligation of a chosen court in this state to hear the case. In these three situations, the chosen court may not hear the case.

            5. Subsection (b)(1) sets out the first exception to the chosen court’s obligation to hear a case – the chosen court cannot hear the case if the exclusive choice of court agreement is null and void under the law of this state. The “null and void” concept also is found in the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”).

            6. In order to be a choice of court agreement within this Act, an agreement must meet certain formal requirements – it must be “concluded or documented in a record.” Section 3(1); See Convention Article 3(c). In addition, this Act sets out certain substantive exceptions to enforcement of a choice of court agreement. The “null and void” exception is one of these substantive exceptions. The Report explains the “null and void” exception as follows:

The “null and void” provision applies only to substantive (not formal) grounds of invalidity. It is intended to refer primarily to generally recognized grounds like fraud, mistake, misrepresentation, duress and lack of capacity. It does not qualify, or detract from, the form requirements in Article 3c), which define the choice of court agreements covered by the Convention and leave no room for national law as far as form is concerned.

Report §126.

            7. The determination as to whether an exclusive choice of court agreement is “null and void” is determined by the law of this state” other than this Act. The reference to “law” in subsection (b)(1) is to the “whole law” of this state – that is, the law of this state including the applicable conflicts of law rules of this state. Therefore, the ultimate substantive rules that will determine whether an exclusive choice of law agreement is null and void may or may not be the substantive law of this state, depending upon the jurisdiction whose substantive law is chosen in the particular instance by this state’s choice of law rules.      

            8. One of the more difficult issues for the Committee has been the question of a chosen court’s obligation to hear a case that has no relation to the state. While some states may be interested in hearing such cases, other states may not wish to do so, or may not be able to do so because of state constitutional restrictions. Article 19 of the Convention allows a party to the Convention to make a declaration giving its courts discretion to decline jurisdiction over unrelated disputes. One alternative would be for the United States to make this declaration. Bracketed subsection (c) presents another alternative. It treats the issue as one of subject matter jurisdiction, rather than one within the discretion of the court. This language would be used in lieu of an Article 19 declaration. A state that does not wish to have its courts hear unrelated cases could adopt this bracketed language, thereby carving unrelated cases out of the subject matter jurisdiction of its state courts, and, thus, under subsection (b), out of its obligation to hear those cases under this Act. The Committee considered another version of the bracketed language that would allow states to list certain circumstances under which its courts would have subject matter jurisdiction over unrelated cases, but the Committee decided at its February 2009 meeting that the possibility of a state creating exceptions could be covered by a legislative note. The Committee continues to discuss this issue.

            9. Subsection (e) is derived from Article 5(3)(b) of the Convention. In addition to transfer pursuant to state law, Article 5 of the Convention would permit removal to a federal court. Report ¶140 n.176. Because that removal would be governed by federal law, however, it is not mentioned in subsection (e).

            SECTION 9. DUTY OF COURT NOT CHOSEN TO DECLINE JURISDICTION. A court of this state which is neither the chosen court nor a court to which the chosen court has transferred the action under Section 8 shall suspend or dismiss proceedings to which an exclusive choice of court agreement applies unless the court determines that:

            (1) the agreement is null and void under the law of the jurisdiction of the chosen court;

            (2) a party to the agreement lacked capacity to enter into the agreement under the law of this state;

            (3) giving effect to the agreement would lead to a manifest injustice or would be manifestly contrary to the public policy of this state or of the United States;

            (4) for exceptional reasons beyond the control of the parties, the agreement cannot reasonably be performed; or

            (5) the chosen court has declined to hear the case.

Reporters’ Notes

            1. Section 9 is based on Article 6 of the Convention.

            2. Section 9 not only sets out the grounds upon which a court of this State not chosen need not honor the choice of court agreement, but also indicates the law under which those exceptions are to be determined. Under subsection (1), the applicable law is that of the jurisdiction of the chosen court. On the other hand, in subsections (2) and (3) the applicable law is that of this state, including, the law of the United States, which is part of the law of this state under the Supremacy Clause of the United States Constitution. The phrase “public policy of this state or of the United States” in subsection (3) is used to underline the fact that the public policy of this state includes the public policy of the United States, which, under the Supremacy Clause would prevail over any conflicting public policy of this state. As with Section 8, the references in this section are to the “whole law” of this state, including the choice of law rules of this state. Thus, the substantive law that ultimately will apply to these exceptions depends on what jurisdiction’s law is chosen by this state’s choice of law rules in any given case.

            3. Subsection (3) refers to both “manifest injustice” and “manifestly contrary to public policy” to emphasize the exceptional nature of the case to which this exception is to be applied. “The standard is intended to be high; the provision does not permit a court to disregard a choice of court agreement simply because it would not be binding under domestic law.” Report ¶152. The inclusion of both “injustice” and “public policy” reflects the inclusive nature of the exception – the court is to consider both the interests of the individuals and the general public interest.

            4. The words “manifest” and “manifestly” are terms used in a number of Hague Conference conventions, e.g. Hague Convention Concerning the Powers of Authorities and the Law Applicable in Respect of the Protection of Infants, art 16, Oct. 5, 1961, 658 U.N.T.S. 143 (member countries can refuse application of the Convention only where such application would be “manifestly contrary to public policy”); Hague Convention on the Conflicts of Laws Relating to the Form of Testamentary Disposition, art. 7, Oct. 5, 1961, 510 U.N.T.S. 175 (member countries can refuse application of the Convention only when “manifestly contrary to ‘ordre public’”). While the content as to what constitutes “injustice” and “public policy” is determined by the law of this state, the standard for when injustice or incompatibility with public policy of this state rises to the level of grounds for refusing to enforce a choice of court agreement is intended to be developed as an autonomous standard under the Convention. Brand & Herrup at 92.

            SECTION 10. RECOGNITION OF JUDGMENT OF CHOSEN COURT OR COURT TO WHICH CASE HAS BEEN TRANSFERRED; ENFORCEMENT OF JUDGMENT RECOGNIZED BY THIS STATE.

            (a) Except as otherwise provided in this [a]ct, a court of this state shall recognize a judgment of a chosen court or a court of a Contracting State to which the chosen court transferred the case pursuant to Section 8.

            (b) Without prejudice to such review as is necessary for the application of the provisions of this [a]ct regarding recognition, the court shall not review the merits of the judgment given by the court of origin. The court shall be bound by the findings of fact on which the court of origin based its jurisdiction, unless the judgment was given by default.

            (c) The court shall recognized a judgment under this [act] only if it has effect between the parties in the country of origin, and shall enforce the judgment only if it is enforceable in the country of origin.

            (d) The court may postpone or refuse to recognize or enforce a judgment if the judgment is the subject of review in the country of origin or if the time for seeking review has not expired. A refusal does not prevent a subsequent application for recognition or enforcement of the judgment.

            (e) If the judgment is the judgment of a court of a Contracting State to which the chosen court transferred the case pursuant to Section 8 and the chosen court had discretion with regard to the decision to transfer, recognition may be refused against a party who objected to the transfer in a timely manner in the country of origin.

            (f) Subject to subsection (g), if a court of this state recognizes a judgment of a court of a Contracting State pursuant to this [act], upon request of the party in whose favor the judgment was granted, the court shall enforce the judgment in the same manner and to the same extent as a judgment rendered in this state.

            (g) A judgment shall be enforced in this state only if it is enforceable in the country of origin.

Reporters’ Notes

            1. The Convention places an obligation on a Contracting State to both recognize and enforce a judgment rendered by the chosen court, with certain exceptions. The Report gives the following description of the difference between the concept of recognition and that of enforcement:

Recognition means that the court addressed gives effect to the determination of the legal rights and obligations made by the court of origin. For example, if the court of origin held that the plaintiff had, or did not have, a given right, the court addressed accepts that this is the case. Enforcement means the application of the legal procedures of the court addressed to ensure that the defendant obeys the judgment given by the court of origin. Thus, if the court of origin rules that the defendant must pay the plaintiff 1000 Euros, the court addressed will ensure that the money is handed over to the plaintiff. Since this would be legally indefensible if the defendant did not owe 1000 Euros to the plaintiff, a decision to enforce the judgment must logically be preceded or accompanied by the recognition of the judgment. In contrast, recognition need not be accompanied or followed by enforcement. For example, if the court of origin held that the defendant did not owe any money to the plaintiff, the court addressed may simply recognize this finding. Therefore, if the plaintiff sues the defendant again on the same claim before the court addressed, the recognition of the foreign judgment will be enough to dispose of the case.

Report ¶170.

            2. Subsection (b) is based on Article 8(2) of the Convention, and generally tracks Convention language.

            3. Subsection (c) is based on Article 8(3) of the Convention. It requires that the judgment be effective in the country of origin as a prerequisite to the recognition of the judgment in this state, and that it be enforceable in the country of origin as a prerequisite to its enforcement in this state.. A judgment has effect in the country of origin if it is legally valid and operative in that country as a valid determination of the parties’ rights and obligations. Report ¶171. If the judgment does not have effect in the country of origin, then it should not be given effect in this state through recognition; similarly, if the judgment ceases to have effect in the country of origin the judgment should not continued to be recognized in this state. Report ¶171. Subsection (c) and Article 8(3) of the Convention also provide that if a judgment is not enforceable in the country of origin – for example, because enforcement has been suspended in the country of origin pending appeal – then the judgment should not be enforced in this state. Report ¶172.

            4. Subsection (d) is based on Article 8(4) of the Convention, and generally tracks its language. Subsection (d) gives the court discretion to deny recognition or enforcement if the judgment is either under review in the country of origin or the time for review in that country has not expired. Report ¶173. Thus, even though under the law of the country of origin appeal of the judgment would not suspend its effectiveness or enforceability, and therefore subsection (c) would not apply, a court of this state, in its discretion, nevertheless could postpone or refuse recognition or enforcement under subsection (d). The Convention provides that, except as otherwise provided in the Convention, the procedure for recognition and enforcement are governed by the law of the Contracting State asked to recognize and enforce the judgment. Convention, Art. 14. Subsection (d) recognizes the court’s inherent authority, as well as its authority conferred by any applicable state rule or statute, to stay recognition or enforcement of a judgment under the circumstances stated in that subsection. The subsection should not be interpreted as a limitation on the court’s otherwise existing authority to take other actions based on these circumstances.

QUERY: DOES THIS COMMENT CAPTURE THE COMMITTEE’S DISCUSSION AT ITS OCTOBER 2009 MEETING?

            5. Subsection(e) is based on Article 8(5) of the Convention. It provides a special discretionary ground upon which the court may deny recognition and enforcement against a party who opposed the transfer when the judgment is the judgment of a court to which the chosen court made a discretionary transfer. Report ¶175.

            6. Subsections (f) and (g) contain the substance of former section 17 of the October draft. They are based on Article 8(1) of the Convention and section 7 of the UFCMJRA. At its October meeting, the Committee decided that this material should be included in Section 10.

            SECTION 11. EXCEPTIONS TO RECOGNITION OF A JUDGMENT. A court of this state may refuse recognition of a judgment of a chosen court if:

            (1) the court determines that the exclusive choice of court agreement was null and void under the law of the country of origin, unless the chosen court has determined that the agreement is valid;

            (2) a party to the agreement lacked the capacity to conclude the agreement under the law of this state;

            (3) the document instituting the proceedings in the chosen court or an equivalent document including the essential elements of the claim was not notified to the defendant in sufficient time and in such a way as to enable the defendant to arrange for a defense, unless the defendant entered an appearance in the chosen court to present the defendant’s case without contesting notification and the law of the country of origin permits notification to be contested;

            (4) the defendant in the proceeding in the chosen court was given notice in this state of the proceeding in the chosen court in a manner incompatible with fundamental principles of this state concerning the service of documents;

            (5) the judgment was obtained by fraud in connection with a matter of procedure;

            (6) recognition of the judgment would be manifestly incompatible with the public policy of this state or of the United States, including a situation where the specific proceedings leading to the judgment in the chosen court were incompatible with fundamental principles of procedural fairness of this state or of the United States;

            (7) the judgment is inconsistent with a judgment given in the United States in a dispute between the same parties; or

            (8) the judgment is inconsistent with an earlier judgment given by a court of another country between the same parties on the same cause of action, if the earlier judgment fulfils the conditions necessary for its recognition under the law of this state other than this [act].

Reporters’ Notes

            1. Subsection (3) is based on Article 9(c)(I) of the Convention, and largely tracks the Convention language.

            2. The language of subsection (6) follows the language of Article 9(e), except for the addition of the phrase “of the United States.” That phrase, which is found in UFCMJRA subsection 4((c)(3), makes clear that, under the supremacy clause of the U.S. Constitution, the public policy of this state includes the public policy of the United States.

            3. Subsection (4) is based on Article 9(c) of the Convention. It deals with the situation in which the defendant to the original proceedings in the chosen court is given notice of those proceedings in this state in a manner that this state would view as incompatible with its fundamental principles regarding service of process. See Report ¶187.

            4. Subsection (7) is based on Article 9(f) of the Convention. This exception provides that a U.S. judgment, whether issued by a state or federal court, inconsistent with the judgment of the chosen court prevails, whether or not the inconsistent judgment is rendered before or after the judgment of the chosen court. Report ¶192. For this provision to apply, the parties to the inconsistent judgment must be the same, but it is not necessary that the cause of action be the same. Report ¶192.

            5. Subsection (8) is based on Article 9(g) of the Convention, and largely tracks the Convention language. Subsection (8) deals with the situation when the competing judgments both were rendered by the courts of another country. In that situation, the court may deny recognition to the chosen court judgment in favor of an earlier inconsistent judgment rendered in the other country between the same parties on the same cause of action.

            6. The language of subsection (8) deals with an issue not expressly addressed by the Convention in Article 9(g): what does the language in the Convention stating that the judgment of the other jurisdiction must be one that “fulfils the conditions necessary for its recognition in the requested State” mean? If the requirements for recognition in the requested jurisdiction (“this state”) include the Convention, then it seems such a judgment will never comply because it is not the judgment of a chosen court. Subsection (8) resolves this ambiguity in the Convention by providing that the relevant law of this state is law “other than this act.”

            7. As with Sections 8 and 9, the reference to “law” in subsections (1) and (2) is to the whole law, including the choice of law rules, of the relevant jurisdiction.

            8. The Section 11 exceptions to recognition of a judgment are discretionary.

            SECTION 12. PRELIMINARY QUESTIONS.

            (a) If a matter excluded from the scope of this [act] under Section 4(c) arose as a determination preliminary to, or asserted as a defense in connection with, a determination relating to a non-excluded matter that is an object of the proceeding, the ruling on the preliminary question may not be recognized under this [act].

            (b) Except as otherwise provided in subsection (c), recognition of a judgment may be refused to the extent that the judgment was based on a ruling on a matter excluded from the scope of this [act] under Section 4(c).

            (c) If the ruling on a matter excluded under Section 4(c) was a ruling on the validity of an intellectual property right, other than copyright or a related right, recognition of the judgment may be refused or postponed under this section only if:

                        (1) the ruling is inconsistent with a judgment or decision of a competent authority under the law of which the intellectual property right arose; or

                        (2) proceedings concerning the validity of the intellectual property right are pending in the country under the law of which the intellectual property right arose.

Reporters’ Notes

            1. Subsection (a) is based on Article 10 (1) of the Convention. Neither a ruling on a matter excluded from the coverage of this [act] under section 4, or such an issue raised as a preliminary question necessary to the court’s ultimate decision of an issue within the scope of this Act, is given preclusive effect under this Act, although the court may recognize such rulings under other law. See Report ¶194.

            2. Subsection (b) is based on Article 10(2). It provides a discretionary ground for denying recognition to a judgment to the extent the judgment is based on an excluded matter. It is not concerned with non-recognition of rulings on preliminary questions (which is dealt with in subsection (a)), but rather with recognition of the judgment resulting from the proceeding in which such rulings were made. Report ¶ 197.

            3. Subsection (c) is based on Article 10(3) of the Convention. It provides a special rule with regard to recognition of judgments based on a preliminary ruling regarding the validity of an intellectual property right other than copyright or a related right. Report ¶198. It limits the court’s ability to refuse recognition to those situations stated in (c)(1) and (2).

            SECTION 13. NON-COMPENSATORY DAMAGES. A court of this state may refuse to recognize a judgment to the extent that the judgment awards damages, including exemplary or punitive damages, which do not compensate a party for actual loss or harm suffered. Damages awarded by the court of origin that serve to cover costs and expenses relating to the proceedings shall be considered compensatory.

Reporters’ Notes

            1. Section 13 is based on Article 11 of the Convention. The changes in the March 2010 draft conform the draft to the federal statute. 

            2. The standard for refusing to recognize non-compensatory damages is intended to be developed as an autonomous concept – the court should not simply apply the law of this state concerning damages, nor should it use this provision as a back-door way of reviewing the judgment. Brand & Herrup, at 126-127. Those damages subject to nonrecognition under Section 13 are only those “that go far beyond the actual loss of the plaintiff.” Report ¶205(b).

            3. Section 13 is a discretionary provision – it does not require a court of this state to deny recognition to the non-compensatory portion of a judgment. “[T]he provision in no way limits recognition and enforcement of damages under national law or other international instruments, and it allows (but does not require) recognition and enforcement under [this Act]”. Report ¶205(I).

            SECTION 14. RECOGNITION OF JUDGMENTS BASED ON CONTRACTS OF INSURANCE. A court of this state may not limit or refuse recognition of a judgment in respect of liability under the terms of a contract of insurance or reinsurance on the ground that the liability under that contract includes liability to indemnify the insured or reinsured concerning:

            (1) a matter to which this [act] does not apply; or

            (2) an award of damages to which Section 13 might apply.

Reporters’ Notes

            Section 14 is based on Article 17(2) of the Convention, and closely tracks its language.

            SECTION 15. RECOGNITION OF JUDGMENT RENDERED BY COURT CHOSEN IN NON-EXCLUSIVE CHOICE OF COURT AGREEMENT.

            (a) Except as otherwise provided in subsection (b), a court of this state shall recognize and enforce a judgment of the court of another Contracting State designated in a non-exclusive choice of court agreement in the same manner and to the same extent that it would recognize and enforce a judgment of a chosen court of a Contracting State designated in an exclusive choice of court agreement under this [act], if the country of origin has made a declaration of reciprocity pursuant to Article 22 of the Convention.

            (b) A judgment of a Contracting State court designated in a non-exclusive choice of court agreement shall be recognized under this [act] only if:

                        (1) there is no other existing judgment between the same parties on the same cause of action given by another court before which proceedings could have been brought in accordance with the non-exclusive choice of court agreement;

                        (2) there is no other proceeding pending between the same parties on the same cause of action in any other court before which proceedings could have been brought in accordance with the non-exclusive choice of court agreement; and

                        (3) where another proceeding that was pending between the same parties on the same cause of action in any other court before which proceedings could have been brought in accordance with the non-exclusive choice of court agreement did not result in a final judgment and is not still pending, the court of origin was the court first seized.

            (c) This section [shall not apply to non-exclusive choice of court agreements concluded before the effective date of the declaration by the United States under Article 22 of the Convention] [shall apply to non-exclusive choice of court agreements whether concluded before or after the effective date of the declaration by the United States under Article 22].

                                                               Reporters’ Notes

            1. Section 15 is based on the language of Article 22. It assumes that the United States will take the declaration permitted under Article 22 of the Convention, which provides for reciprocal recognition and enforcement of judgments rendered by the courts of member countries chosen in a non-exclusive choice of court agreement in certain circumstances.

            2. Subsection (a) provides that when a reciprocal declaration has been made under Article 22 of the Convention, a court of this state “shall recognize and enforce a judgment rendered by the court of another Contracting State designated in a non-exclusive choice of court agreement in the same manner and to the same extent that it would recognize and enforce a judgment rendered by a chosen court of a Contracting State designated in an exclusive choice of court agreement under this [act].” Thus, a court of this state has the same obligation to recognize and enforce such judgments as it does to recognize and enforce judgments of a chosen court under an exclusive choice of court agreement, and recognition and enforcement of such judgments is subject to all the requirements, limitations, and exceptions applicable to recognition and enforcement of judgments of a chosen court under an exclusive choice of court agreement, including the scope provisions of section 4 of the Act, and the requirements for recognition and exceptions to recognition contained in this Act. In addition, recognition and enforcement of such judgments is subject to the additional exceptions stated in subsection 15(b). See Report, ¶¶243, 245.

            3. Subsection 15(b) states grounds for denying recognition and enforcement applicable only to a judgment rendered by a Contracting State designated in a non-exclusive choice of court agreement. It provides that “recognition or enforcement is not mandatory when there exists a judgment given by any other court before which proceedings could be brought in accordance with the non-exclusive choice of court agreement or where there exists a proceeding pending between the same parties in any other such court on the same cause of action, regardless of whether such proceedings were commenced before or after those before the chosen court or whether such judgment was given before or after that of the chosen court.” Report ¶245. Section 15(b)(3) deals with the situation in which there were proceedings before another court that did not result in a final judgment and are not still pending. In that situation, the Contracting State court of origin must have been the first seized with jurisdiction over the action. Report ¶251.

            4. Subsection (c) is new. It copies the language of the draft federal statute with regard to application of the Act to non-exclusive choice of court agreements. Non-exclusive choice of court agreements are not covered by the transition provisions of section 24. The draft federal statute contains two possible alternatives – one that would provide for retroactive application of the Act to non-exclusive choice of court agreements and one that would not. At the October 2009 meeting, several observers expressed a strong preference for the retroactive application option.

NOTE: The provision is placed here rather than as a separate transition provision because this is where it is located in the draft federal statute.

QUERY: (1) SHOULD THE ACT TAKE A POSITION ON THIS ISSUE BEFORE THE FEDERAL ACT HAS DONE SO OR RETAIN BOTH OPTIONS IN BRACKETS IN RECOGNITION THAT THE ULTIMATE DECISION ON THIS ISSUE WILL BE MADE AT THE FEDERAL LEVEL? (2) IS A PROVISION USING THE TIME OF THE U.S. DECLARATION UNDER ARTICLE 22 AS THE MEASURING POINT ADEQUATE, OR SHOULD THE TIME WHEN THE OTHER CONTRACTING STATE FILES A RECIPROCAL DECLARATION BE TAKEN INTO ACCOUNT AS WELL? (3) SHOULD THE PROVISION BE PLACED IN A SEPARATE TRANSITION RULE SECTION OR DOES IT MAKE SENSE TO INCLUDE IT IN THE GENERAL SECTION ON NONEXCLUSIVE CHOICE OF COURT AGREEMENTS?

            SECTION 16. DOCUMENTS TO BE PRODUCED IN CONNECTION WITH REQUEST FOR RECOGNITION.

            (a) A party seeking recognition of a judgment pursuant to section 17 of this [act] shall include with its request for recognition:

                        (1) a complete and certified copy of the judgment;

                        (2) the choice of court agreement, a certified copy of that agreement, or other evidence of its existence;

                        (3) if the judgment was given by default, the original or a certified copy of a document establishing that the document that instituted the proceedings in the chosen court or an equivalent document was notified to the defaulting party; and

                        (4) any documents necessary to establish that the judgment has effect or, if applicable, is enforceable in the country of origin.

            (b) In addition to the documents required by subsection (a), a party seeking recognition of a judicial settlement under section 18 shall produce a certificate of the court of the country of origin that the judicial settlement or a part of it is enforceable in the same manner as a judgment in the country of origin.

            (c) If the terms of a judgment for which recognition is sought are not sufficient for the court to verify whether this [act] has been complied with, the court may require the production of any documents necessary to show compliance.

Alternative A

            (d) An application for recognition of a judgment may be accompanied by a document, issued by a court or an officer of a court of the country of origin, in the form recommended and published by the Hague Conference on Private International Law.

Alternative B

            [(d) An application for recognition of a judgment accompanied by a document, issued by a court or an officer of a court of the country of origin, [in the form recommended and published by the Hague Conference on Private International Law] [in the form contained in subsection __] complies with the requirements of subsections (a) and (b).]

End of Alternatives

            (e) If the documents required to be produced under this section are not in English, they must be accompanied by a certified translation into English.

            Reporters’ Notes

            1. Section 16 is based on Article 13 of the Convention. The section substantially tracks the language of the Convention.

            2. Subsections (a) and (b) establish the minimum documentary requirements for an application for recognition of a judgment.

            3. Subsection (d) references the form developed by the Hague Conference on Private International Law as part of the drafting of the Convention to be used in connection with applications for recognition. A party is not required to present this form to the court from which recognition is sought. Use of this form, however, will further standardization and simplification of the recognition process.

QUERY: SHOULD USE OF THIS FORM CONSTITUTE A SAFE HARBOR RE THE INITIAL DOCUMENTARY REQUIREMENTS? IF SO, SHOULD THE FORM BE INCLUDED IN THIS ACT? THE BRACKETED ALTERNATIVE LANGUAGE OF SUBSECTION (D) RAISES THESE ISSUES. NOTE THAT THE FORM MUST BE ISSUED BY THE COURT OF ORIGIN OR AN OFFICER OF THAT COURT. THUS, THE COURTS WOULD NEED TO BE PERSUADED TO ADOPT THE FORM IN ORDER FOR IT TO BE AVAILABLE TO APPLICANTS. WOULD PROVIDING A SAFE HARBOR DO THIS?

            4. Section (e) of the October 2009 draft dealing with legalization has been moved to its own section in this draft.

            SECTION 17. PROCEDURE FOR RECOGNITION OF JUDGMENT.

            (a) If recognition of a judgment is sought under this [act] as an original matter, the issue of recognition must be raised by bringing an action seeking recognition of the judgment.

            (b) If recognition of a judgment is sought under this [act] in a pending action, the issue of recognition may be raised by counterclaim, cross-claim, or affirmative defense.

Reporters’ Notes

            Article 14 of the Convention provides that “[t]he procedure for recognition, declaration of enforceability or registration for enforcement, and the enforcement of the judgment, are governed by the law of the requested State unless this Convention provides otherwise.” The Convention contains no provision with regard to the specific manner in which recognition must be sought. This section establishes the procedures for seeking recognition of a judgment under this [act]. It requires that recognition be sought in a judicial proceeding. Section 17 is based on Section 6 of the Uniform Foreign Country Money Judgment Recognition Act.

            SECTION 18. STATUTE OF LIMITATIONS APPLICABLE TO RECOGNITION PROCEEDINGS. An action to recognize a judgment under Section 17 of this [act] must be commenced within the time during which the judgment has effect between the parties in the country of origin.

Reporters’ Notes

            The Convention contains no statute of limitations. The Report, however, indicates in its discussion of the Article 8(3) requirement that a judgment “ shall be recognized only if it has effect in the State of origin” that a judgment “shall be recognized from the time, and for as long as, it produces its effects in the State of origin.” Report ¶¶ 171, 172, n. 207 & 208. The Committee determined that these statements indicated that no lesser period than the time during which the judgment is effective in the country of origin could be placed on the ability to bring a recognition action. This differs from Section 9 of the Uniform Foreign Country Money Judgment Recognition Act, which does place an outer limit on the ability to bring an action for recognition under its Section 6.

QUERY: DOES THE COMMITTEE WISH TO REVISIT THIS ISSUE? DOES SECTION 18 SERVE ANY PURPOSE IN LIGHT OF SECTION 10© WHICH ALLOWS RECOGNITION ONLY IF THE JUDGMENT HAS EFFECT IN THE COUNTRY OF ORIGIN?

            SECTION 19. JUDICIAL SETTLEMENTS.

            (a) In this section “judicial settlement” means a contract to end litigation concluded by the parties to the litigation before a judge and recorded by the judge in an official document. The term does not include a consent order or an out of court settlement.

            (b) A court of this state shall enforce a judicial settlement in the same manner as a judgment under this [act] if:

                        (1) the judicial settlement has been approved by a chosen court of a Contracting State or concluded before that court in the course of proceedings;

                        (2) the settlement is enforceable in the same manner as a judgment in the country of origin; and

                        (3) the settlement meets the requirements for recognition and enforcement of a judgment under this [act].

                                                               Reporters’ Notes

            1. Section 19 is based on Article 12 of the Convention.

            2. The concept of “judicial settlements” or “transactions judiciares” does not exist in common law systems. The Report states:

In France and other civil law countries they are contracts concluded before a judge by which the parties put an end to litigation, usually by making mutual concessions. Parties submit their agreement to the judge, who records it in an official document. Such agreements usually have some, or even all, of the effects of a final judgment. A judicial settlement is different from a consent order in the common law sense (an order made by the court with the consent of both parties), since a consent order is a judgment and may be recognised and enforced as such under Article 8 of the Convention. On the other hand, a judicial settlement is different from an out-of-court settlement, since it is made before a judge, puts an end to the proceedings and is usually enforceable in the same manner as a judgment. For these reasons, a special provision is devoted to it in the Convention.

Report ¶207.

            3. Although subsection (b) provides for the enforcement of a judicial settlement meeting the requirements established there in the same manner as a judgment under this [act], the Report makes it clear that judicial settlements are not given the same effect as a judgment recognized under this [act]. Unlike a judgment, which is given preclusive effect once recognized, judicial settlements have no preclusive effect.

            4. The following examples illustrate the application of section 19.

            Example 1. A and B enter a contract with an exclusive choice of court clause selecting the courts of France to determine disputes under the contract. Subsequently, A sues B in a French court seeking 1000 Euros he asserts is due under the contract. A and B then entered into a judicial settlement pursuant to which B agrees to pay A 800 Euros. B fails to pay the 800 Euros and A brings proceedings to enforce the judicial settlement in this state. Assume that the United States and France are both parties to the Convention. If the judicial settlement meets the requirements for enforcement under section 18(a), then it may be enforced in a court of this state.

            Example 2. Assume the same facts as Example 1, except that B pays the 800 Euros pursuant to the judicial settlement without the need for enforcement proceedings. If A nevertheless brings a new action for the remaining 200 Euros, B cannot ask a court in this state to recognize the judicial settlement as precluding the action.

            See Report ¶¶ 208, 209.

            SECTION 20. LEGALIZATION. All documents forwarded or delivered under this [act] are exempt from legalization or any analogous formality, including Apostille.

Reporters’ Notes

            This section contains the material formerly found in subsection 16(e). It is based on Article 18 of the Convention. It reflects a standard provision found in Hague Conventions.

            SECTION 21. INTERNATIONAL CHARACTER; UNIFORMITY OF INTERPRETATION. In applying and construing this [act], consideration must be given to its character as a law implementing an international convention, to its character as a uniform law, and to the need to promote uniformity of interpretation with respect to its subject matter within the United States and among Contracting States.

Reporters’ Notes

            1. Section 21 is based on the standard ULC language and Article 23 of the Convention. The changes in this draft were suggested by the Style Committee.

            2. The language of Article 23 of the Convention or similar language is found in many international conventions, including other Hague Conference conventions and the United Nations Convention on the International Sale of Goods (CISG). The Report states that the uniformity provision of Article 23 requires courts:

to interpret [the Convention] in an international spirit so as to promote uniformity of application. Where reasonably possible, therefore, foreign decisions and writing should be taken into account. It should also be kept in mind that concepts and principles that are regarded as axiomatic in one legal system may be unknown or rejected in another. The objectives of the Convention can be attained only if all courts apply it in an open-minded way.

Report ¶256. As the implementing legislation for the Convention in this state, this Act should be interpreted in a similar fashion.

            SECTION 22. SAVINGS CLAUSE. This [act] does not prevent the enforcement of a choice of court agreement not within the scope of this [act] or recognition and enforcement of a judgment not within the scope of this [act] under principles of comity or otherwise.

Reporters’ Notes

            Section 22 is based in part on Section 11 of the Uniform Foreign Country Money Judgment Recognition Act. It reflects the limited scope of the Convention and the intention of member countries not to prevent enforcement of a choice of court agreement or recognition and enforcement of the resulting judgment under national law.

            SECTION 23. SEVERABILITY. A court of this state shall recognize or enforce a severable part of a judgment if recognition or enforcement of only that part is applied for or only part of the judgment is capable of being recognized and enforced under this [act].

                                                               Reporters’ Notes

            Section 23 is based on Article 15 of the Convention, and tracks its language.

            SECTION 24. TRANSITION PROVISIONS FOR EXCLUSIVE CHOICE OF COURT AGREEMENTS.

            (a) This [act] applies to an exclusive choice of court agreement that designates a court or courts of this state as the chosen court or courts if the parties concluded the exclusive choice of court agreement after entry into force of the convention in the United States.

            (b) This [act] does not apply to proceedings filed in a court of this state that is not the chosen court unless:

                        (1) the convention entered into force in the country of the chosen court before the parties concluded the exclusive choice of court agreement; and

                        (2) the proceedings in this state were commenced after entry into force of the convention in the United States.

            (c) This section does not apply to non-exclusive choice of court agreements under Section 15 of this [act].

Reporters’ Notes

            1. Subsections (a) and (b) are based on Article 16 of the Convention. Article 16 provides that the Convention applies to exclusive choice of court agreements concluded after its entry into force for the country of the chosen court, but does not apply to proceedings instituted before its entry into force with respect to the country of the court seized. When proceedings are filed in the country of the chosen court, the first part of this rule applies – the relevant inquiry is whether the parties entered into the exclusive choice of court agreement after the date on which the Convention entered into force with regard to the country of the chosen court. When proceedings are instead filed in another country – the country of the “court seized” – then both parts of the rule become relevant. Proceedings may be filed in another country in two situations under the Act – (1) when a party to the exclusive choice of court agreement files an action covered by the exclusive choice of court agreement in a court of a country other than that of the chosen court or (2) when a party files an action for recognition and enforcement of a judgment of the chosen court in the courts of another country. In these situations, the exclusive choice of court agreement must have been concluded after the Convention’s entry into force in the country of the chosen court, and the proceedings in the other country must have been filed after the Convention entered into force for that other country. Report ¶¶218, 219. The language of this section differs somewhat from the language of Article 16 because of the need to state the transitions rules in the specific context of courts of a state of the United States. The substance of the provision, however, is intended to be the same as that of Article 16 of the Convention.

            2. The application of subsections (a) and (b) is illustrated by the following examples:

            Example 1: A and B entered into an exclusive choice of court agreement on February 3, 2011 selecting the courts of New York as their exclusive forum. The Convention enters into force in the United States on July 1, 2011. The New York legislature passes this Act, with an effective date of February 1, 2011. A files an action in New York state court on March 1, 2011. This Act will not apply to the parties’ exclusive choice of court agreement because the Convention had not yet entered into force in the United States when the exclusive choice of court agreement was concluded. Therefore, New York will not be under an obligation under this Act to hear the case See Report, ¶220, Example 1. Whether the New York court would hear the case would be determined by other law of New York.

            Example 2: Assume the same facts as in Example 1, except that the parties had entered into the exclusive choice of court agreement on July 2, 2011. Because the exclusive choice of court agreement would have been entered into after the Convention entered into force with regard to the United States, then this Act would apply and the New York state court would be under an obligation to hear the case under this Act.

            Example 3: A and B entered into an exclusive choice of court agreement selecting the courts of London, England on February 3, 2011. The Convention enters into force in the United States on January 1, 2011. The Convention enters into force in the United Kingdom on August 1, 2011. The New York legislature passes this Act, with an effective date of February 1, 2011. B files an action in New York state court on July 15, 2011. This Act will not apply to the parties’ exclusive choice of court agreement because, the exclusive choice of court agreement was concluded before the Convention entered into force in the United Kingdom, the country of the chosen court. This will be the result even though the exclusive choice of court agreement was concluded and the proceedings were filed in New York after the Convention had entered into force with regard to the United States. When the question is applicability of the Act to a proceeding filed in a court in a country other than that of the chosen court, both subsection (a) and subsection (b) apply. Therefore, the New York state court will not have an obligation under this Act to dismiss the proceedings filed by B. Whether the New York court would dismiss the proceedings in favor of the chosen forum would be determined by other law of New York.

            Example 4: Assume the same facts as in Example 3, except that the Convention enters into force with regard to the United Kingdom on January 1, 2011 and with regard to the United States on August 1, 2011. The result would be the same as in Example 3 because, although in this example the exclusive choice of court agreement was concluded after the Convention entered into force with regard to the country of the chosen court, the proceeding was commenced in the New York court before the Convention entered into force with regard to the United States. See Report ¶220, Example 2.

            Example 5: A and B entered into an exclusive choice of court agreement on February 3, 2010 selecting the courts of London, England as their exclusive forum. Assume that this date is after the date on which the Convention entered into force with regard to the United Kingdom. A obtained a judgment against B in the chosen court in London. The New York legislature passes this Act with an effective date of February 1, 2011. A files an action for recognition and enforcement of the London judgment in New York state court on March 1. 2011. The Convention enters into force with regard to the United States on July 1, 2011. This Act will not apply to A’s action for recognition and enforcement because that action was filed before the Convention entered into force in the United States. Therefore, the New York state court will not be under an obligation under this Act to recognize and enforce the London court judgment. Whether the London court judgment would be entitled to recognition and enforcement would be determined by the other law of New York.

            Example 6: Assume the same facts as in Example 5, except that the Convention enters into force with regard to the United States on February 15, 2011. Because the Convention had entered into force in the United Kingdom – the country of the chosen court -- when the parties concluded their exclusive choice of court agreement, and had entered into force in the United States – the country of the court seized – when A filed the action seeking recognition and enforcement of the London judgment in the New York state court, this Act will apply to A’s action for recognition and enforcement, and the New York state court will be under an obligation to recognize and enforce the London judgment in accordance with this Act. See Report ¶220, Example 2.

            3. A convention enters into force with regard to the United States at the time designated in the convention after the time when the President deposits the instrument of ratification with the depositary designated in the convention, if the convention also is in force internationally. A convention enters into force internationally at the time designated in the convention. If the United States deposits its instrument of ratification before the convention is in force internationally, then the convention enters into force with regard to the United States at the time that it enters into force internationally. American Law Institute, Restatement (Third) of the Foreign Relations Law of the United States §312 cmt. j. Article 31 of the Convention provides that the Convention enters into force internationally “on the first day of the month following the expiration of three months after deposit of the second instrument of ratification, acceptance, approval or accession” to the Convention. For countries becoming parties to the Convention after it enters into force internationally, the Convention enters into force “on the first day of the month following the expiration of three months after the deposit of its instrument of ratification, acceptance, approval or accession.” Art. 31(2)(a).

            4. The Transitional provisions of the Convention do not apply with regard to declarations concerning non-exclusive choice of court agreements under Article 22. Report ¶254. Those transition provisions are contained in Section 15.

            SECTION 25. EFFECTIVE DATE. This [act] takes effect ... .