The confusing state of international jurisdiction, particularly where the internet and e-commerce are concerned, affects businesses worldwide.
When something goes wrong with contracts between parties in different countries, there is often confusion as to where a court action should be brought. Should it be in the country of the purchaser? Or that of the seller or service provider? And how can you enforce a court ruling when each party is in a different country?
A recent ICC survey, submitted to government representatives negotiating the draft convention in The Hague, asked 100 leading companies whether any significant decision had ever been determined by uncertainty regarding the court that would resolve disputes or the law that would apply to the contract. Forty-one percent of respondents said 'yes'.
Clearly questions of international jurisdiction are of concern to companies when they are making business decisions. The fear is that until there is an international agreement to clarify matters then businesses will be reluctant to take full advantage of the opportunities put forward by the internet.
The proposed Convention seeks to address these issues.
In terms of the draft, signatory states would agree to follow a set of rules regarding jurisdiction for cross-border litigation. Every country agrees to enforce nearly all of the member country judgments, subject to an exception for judgments that are "manifestly incompatible with public policy," or to specific treaty exceptions, such as one for certain antitrust claims.
Negotiations for the Convention began in 1996, but there are signs that the long process of consultation and amendment may finally be coming to a close. On 19th August an invitation was sent to the member states of the Hague Conference on Private International Law, inviting them to a Special Commission to negotiate the draft. This will take place in early December.
Once that hurdle is crossed, a full-scale negotiation known as a diplomatic conference is scheduled for next June to finalise matters.
The International Chamber of Commerce (ICC) welcomed the news of the Special Commission, and the terms of the draft Convention. ICC Secretary General Maria Livanos Cattaui said: "The document that is now going forward for final negotiations is on the right lines."
Michael Hancock of Salans in Paris, the international business lawyer who presented the survey findings to the Hague negotiators on behalf of ICC, said:
"The draft now going forward satisfies the principal business expectations that the Convention will increase the respect given to agreements between businesses regarding choice of national court and enforceability of judgments."
He added that the predictability of judgments would be strengthened under the present draft by limiting the right of the national courts of choice to dismiss proceedings.