Niles Letter Regarding the Hague Convention on

Jurisdiction and the Enforcement of Foreign Judgments

June 4, 2001

Jeffrey D. Kovar, Esq.

Private International Law

U.S. Department of State

Washington, DC

Dear Mr. Kovar,

In advance of the first part of the Diplomatic Conference on the Hague Convention on Jurisdiction and the Enforcement of Foreign Judgments, I would like to convey to you the current views of the members of the United States Council for International Business (USCIB). 

In spite of the insights provided by the U.S. delegates during the May 15, 2001 and May 16, 2001 public hearings regarding the draft Convention, our members remain concerned that the implications of the draft treaty are not understood well enough to seek agreement on final text during the June diplomatic conference.  We support efforts to address some of the problems with the existing text and to arrive at a new official draft.  However, a new official draft may only be possible for those provisions for which consensus currently seems attainable. We believe that the resulting draft should be subject to further intense public scrutiny with the opportunity for re-drafting. 

Moreover, we caution against setting a premature date for the second stage of the diplomatic conference so as to provide for sufficient time for further discussion on the complex issues raised by the draft Convention.  Business and the public need considerable time to study a new draft text and to engage in additional dialogue with the U.S. negotiators.  A premature and artificial deadline would hinder this process and might lead to the adoption of final text that has serious detrimental implications for the U.S. business community.  Further, the law is rapidly evolving with respect to one means of commerce that creates the most uncertainty surrounding the effects of the Convention, namely electronic commerce.  More time is needed to explore appropriate solutions to address the potential negative implications that the Convention could have on the resolution of legal disputes arising from electronic commerce.

In our letter of February 26, 2001 to the Hague Delegates, USCIB expressed the view that consensus on the white-listed jurisdictional aspects of the Convention was likely to be achieved only with respect to business-to-business contractual activity.  At present, we do not believe that the implications of the Convention are clear enough to agree to final text even for business-to-business activities.  Moreover, Article 10 raises particularly complex issues that should be discussed fully, but, due to their complexity, it appears premature to resolve them at this juncture.

Nonetheless, we believe that progress could be made toward clarifying the text with respect to business-to-business activities if the issues set forth below are kept in mind during the drafting of a new text.  When there is clarity as to the current draft text and the interaction between different articles, USCIB members will be better equipped to provide more concrete guidance to negotiators. 

Article 1:  It should be clear that the Convention does not preclude the ability of parties to engage in on-line alternative dispute resolution mechanisms, such as the Uniform Dispute Resolution Process (UDRP).

Article 4:  USCIB has long held the view that the freedom of contract is a fundamental principle of jurisdiction.  Therefore, we strongly support the party autonomy provided by Article 4.

Article 6:  The application of Article 6 to websites is problematic.  The mere accessibility of a website in itself should not constitute a ground for jurisdiction.  It is important to note that law regarding jurisdiction over websites is rapidly evolving and the Convention should not prejudice that natural evolution. 

Article 7: Consistent with the views stated above, USCIB believes that this article should be stricken because numerous meetings have clearly reflected that there is not consensus on this article among stakeholders.

Article 8:  Could an independent contractor be considered an “employee” in some countries? The question of whether a particular working arrangement creates the relationship of employee and employer can not be currently answered consistently throughout the world. It is possible that this Article would subject a company to jurisdiction in courts of countries who define that relationship much more broadly than others, and inconsistently with the expectations of the hiring company. The question is particularly relevant for companies that contract with, e.g., software developers who provide services electronically. 

Article 9:  The text should specify that a website alone is not considered a “branch” and is not deemed to constitute carrying on “regular commercial activity.” 

Article 10:  This Article raises complex issues in the context of e-commerce, including:  (1) the meaning of “act” and “effect,” (2) where the injury "arose" or "may arise"; (3) the concept of “foreseeability,” and (4) the potential for inappropriate jurisdiction and enforcement of judgments against online service providers and other stakeholders, especially in light of variations in national definitions of particular torts, which will need to be discussed fully.  These issues are particularly sensitive and have only begun to be addressed and considered in the past year.  This text requires considerable work to achieve acceptable solutions, and it is important to provide further time for discussions between affected communities.

Article 12:  New text was proposed in Edinburgh to address concerns about infringement claims and unregistered trademarks. This proposal appears to be an improvement but it requires further study.

Article 13: This article raises complex issues, particularly with respect to application of provisional measures to Internet activities and Internet Service Providers, that need to be discussed further prior to its final resolution.

Article 28:  There are several questions relating to Article 28:  What would be a sufficient public policy basis for not enforcing a judgment?  How will the different views of signatories on this issue affect the application of this article in a global context?

Article 37:  USCIB does not support carveouts for regional conventions.  Such regional carveouts would undermine a global solution.  Consequently, Article 37 should be deleted.

Finally, whether or not the ultimate version of the Convention applies to consumers, we urge that “consumer” be defined narrowly, so as not to include entities such as non-profit corporations.

We appreciate having the opportunity to provide comments on the draft Convention and look forward to a continued productive exchange of ideas with the U.S. government delegation.  I have sent identical letters to Eleanor Lewis of the Department of Commerce and to Hugh Stevenson of the Federal Trade Commission.

Sincerely,

Thomas M.T. Niles