1 Coming into force of the Hague Convention
Edited By: Trevor C Hartley
From: Choice-of-court Agreements under the European and International Instruments - Online Update, September 2015: The Revised Brussels I Regulation, the Lugano Convention, and the Hague Convention
- Contractual term — Choice of law clauses — Jurisdictional agreements and the Brussels Regulation — Insurance contracts — Specific exclusions — Hague Evidence Convention
1. Coming into force of the Hague Convention
N-3-1 The Hague Convention on Choice of Court Agreements 2005 (‘Hague’)1 was signed on behalf of the European Union on1 April 2009.2 On 4 December 2014, the EU took the decision to approve (ratify) the Convention.3 It approved the Convention on 11 June 2015, and the Convention will come into force as between the European Union and Mexico on 1 October 2015. As a result of the European Union’s approval of the Convention, it will be binding on all its Member States except Denmark. It is expected that Denmark will ratify shortly. Provision for its application in the United Kingdom will be made by a Statutory Instrument, The Civil Jurisdiction and Judgments (Hague Convention on Choice of Court Agreements 2005) Regulations 2015.4
The objective of this declaration which excludes certain types of insurance contracts from the scope of the Convention is to protect certain policyholders, insured parties and beneficiaries who, according to internal EU law, receive special protection.
(a) where the contract is a reinsurance contract;
(b) where the choice of court agreement is entered into after the dispute has arisen;
(c) where, without prejudice to Article 1(2) of the Convention, the choice of court agreement is concluded between a policyholder and an insurer, both of whom are, at the time of the conclusion of the contract of insurance, domiciled or habitually resident in the same Contracting State, and that agreement has the effect of conferring jurisdiction on the courts of that State, even if the harmful event were to occur abroad, provided that such an agreement is not contrary to the law of that State;
(a) seagoing ships, installations situated offshore or on the high seas or river, canal and lake vessels;
(c) railway rolling stock;
(a) ships, installations or vessels as referred to in point (i)(a);
(b) aircraft, in so far as the law of the Contracting State in which such aircraft are registered does not prohibit choice of court agreements regarding the insurance of such risks;
(c) railway rolling stock;
(v) any financial loss connected with the use or operation of ships, installations, vessels, aircraft or railway rolling stock as referred to in point (i), in particular loss of freight or charter-hire;
(vii) any credit risk or suretyship risk where the policy holder is engaged professionally in an industrial or commercial activity or in one of the liberal professions and the risk relates to such activity;
N-3-3 The reason the European Union made this declaration is that insurance is subject to a special regime in Brussels Regulation 2012 (‘Brussels 2012’).6 Under Article 15 of Brussels 2012,7 insurance contracts are treated in the same way as consumer contracts and employment contracts: choice-of-court agreements are not permitted unless they are concluded after the dispute has arisen or in certain other cases where they would not produce unfair results. It is thought that insurance companies would otherwise use their economic power to designate the courts of a country in which it would be difficult or disadvantageous for the policy holder to bring proceedings. The view was taken that such protection is needed not only in the case of insurance contracts concluded by consumers, but also in the case of contracts concluded by small businesses. The purpose of the declaration was to ensure that the protection granted by Brussels 2012 would not be undermined by Hague.
N-3-4 Under the original draft of the declaration, it was proposed to exclude insurance only if the policyholder was domiciled in the European Union. However, this would have been contrary to Article 21 of Hague,8 which permits exclusions only with regard to ‘specific matters’, which means that a declaration under Article 21 cannot use any criterion other than subject matter.9 If this were not the rule, a Contracting State could obtain an unfair advantage by excluding a given matter in situations in which it would be against its interests to uphold a choice-of-court agreement, but not excluding it when the choice-of-court agreement would work to its advantage. Other Contracting States could hardly be expected to accept this.
N-3-5 In its final version, paragraph 1 of the declaration excludes insurance in general, except as provided for in paragraph 2. Paragraph 2 then specifies the matters that are excluded from the exclusion—in other words, that are covered by the Convention. These will be briefly considered.
N-3-6 Reinsurance contracts are excluded from the exclusion under paragraph 2(a) of the declaration. Although Brussels 2012 contains no express provision, the special provisions on insurance do not apply to reinsurance. The Report on the 1978 Convention of adhesion to the Brussels Convention (‘Schlosser Report’)10 states, ‘Reinsurance contracts cannot be equated with insurance contracts. Accordingly, Articles 7 to 1211 do not apply to reinsurance contracts.’ This view is justifiable from a policy point of view: since these are contracts in which both parties are insurance companies, there is no need to give special protection to either of them.
N-3-7 Choice-of-court agreements entered into after the dispute has arisen are excluded from the exclusion under paragraph 2(b) of the declaration. Such agreements are not subject to the special rules in Brussels 2012.12
N-3-8 Choice-of-court agreements covered by paragraph 2(c) of the declaration are excluded from the exclusion because there is a similar provision in Brussels 2012.13
N-3-9 Insurance covering ‘large risks’ is excluded from the exclusion under paragraph 2(d) of the declaration because it is thought that special protection is unnecessary in such cases. Such contracts are also excluded from the special rules in Brussels 2012.14 The definition of ‘large risks’ is complicated but it is based on the definition in Article 16 of Brussels 2012, read with the definition in Directive 2009/138/EC.15
3 Council of the European Union, Council Decision of 4 December 2014 on the approval, on behalf of the European Union, of the Hague Convention of 30 June 2005 on Choice of Court Agreements, Decision 2014/887/EU, OJ 2014, L 353/5, 4 December 2014
6 Council of the European Union, Regulation 1215/2012 (Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (‘Brussels 2012’), 12 December 2012, Articles 10-16
10 Report by Professor Schlosser on the Convention of 9 October 1978 on the Accession of the Kingdom of Denmark, Ireland and the United Kingdom of Great Britain and Northern Ireland to the Convention on Jurisdiction and the enforcement of judgments in Civil and Commercial matters and to the Protocol on its interpretation by the Court of Justice (‘Schlosser Report’) (OJ 1979, C 59/71), p. 117, para. 151
13 Brussels 2012, ibid., Article 15(3). This provision applies only if the parties are domiciled or habitually resident in the same Member State. Para. 2(c) of the declaration extends this to parties who are domiciled or habitually resident in the same Contracting State. If this had not been done, the declaration would have been contrary to Article 21 of Hague.