"Judicial Convention": Issues of Jurisdiction

In 2019, the Hague Conference on Private International Law (hereinafter referred to as the GKMCHP) developed an international treaty regulating the cross–border movement of judgments – the Convention on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters of July 2, 2019 (hereinafter referred to as the 2019 Convention) ^[1].

The intention of the developers was for the 2019 Convention to become a universal regulator in the designated area, because the 2019 Convention is open for accession by any state.

The ceremony of its signing by the Russian side took place in the Netherlands on November 17, 2021. To date, the consent to be bound by the 2019 Convention has been given by the countries of the European Union (27 states) and Ukraine; for these states, it will enter into force on September 1, 2023. In addition, the 2019 Convention has been signed by five countries: the USA, Costa Rica, Israel, the Russian Federation and Uruguay.

For a long time it was believed that the development and entry into force of a universal international treaty on the recognition of foreign judicial decisions is hardly possible at all. For example, the famous Russian jurist T.M. Yablochkov wrote about this^[2]. Therefore, the preparation of the text of the treaty itself, the accession of States to it and the prospects for its real application caused positive responses ^{[3, 4 p. 170-186, 5 p. 181-192, 6]}.

Some Russian experts were also quick to give the 2019 Convention a positive assessment. At the same time, they note its global nature and the opportunity to increase the interest of participants in economic turnover in resolving cross-border disputes in state courts. The 2019 Convention itself should, in their opinion, become a simple and effective basis for the recognition and enforcement of foreign judgments (hereinafter referred to as the recognition of foreign judgments), acceptable to States with different social, economic and legal systems.

The 2019 Convention was also highly appreciated by the Ministry of Justice of the Russian Federation. At the same time, the special importance of this document was emphasized, since "the Convention found an optimal balance between the free circulation of court decisions, which is designed to ensure the effective implementation of the right to a court in a broad, cross-border aspect, and the possibilities of effectively ensuring national sovereignty and protecting the public interests of the state" ^[7].

Moreover, this international treaty has not yet been ratified by Russia and, accordingly, has not entered into force for it, and judicial acts have already been included in the Review of Judicial Practice of the Supreme Court of the Russian Federation, in which there are references to the 2019 Convention as an international legal act that implements a modern international procedural standard - judicial control the authorities of the executing state control a foreign judicial act in any procedural form ^[8].

However, in our opinion, the accession to the 2019 Convention should be preceded by a detailed analysis of all its provisions. There is no doubt that the 2019 Convention is a rather complex legal instrument. Russian specialists have yet to evaluate some of the solutions proposed in this agreement, including from the point of view of the interests of our state. Moreover, in the light of the "legal competition" gaining momentum ^[9], the Russian Federation should carefully weigh the immediate and long-term consequences of participation in this international treaty.

The analysis of the 2019 Convention suggests that, first of all, it is necessary to correlate how the provisions on the recognition of a foreign court decision and the provisions on the jurisdiction of the court that issued it are interconnected in it. According to American Professor Ronald Brand, the core of the 2019 Convention is the provisions on jurisdiction, because it is the issues of jurisdiction that will be of decisive importance for any state when deciding whether to join the 2019 Convention ^{[10, p. 12]}

Indeed, when recognizing a foreign court decision before the court that is to carry out such recognition, first of all, the question arises about the legality of consideration by a foreign court of a particular case. In other words, a court of one State checks whether a foreign court has gone beyond its jurisdiction. Sometimes in these cases, the terms "competence", "jurisdiction" or "authority" are used (i.e. whether the court is authorized to consider a particular case).

Sometimes, in legislation and international treaties, issues of jurisdiction and enforcement of foreign judgments are considered separately. Of course, the option in which such regulation is coordinated is more preferable. In this sense, a unique regulator was once concluded within the framework of the EU (then the EEC) The Brussels Convention on Jurisdiction and Enforcement of Judgments in Respect of Civil and Commercial Disputes of September 27, 1968 (hereinafter – the Brussels Convention of 1968) ^[11]. Later it was replaced by the Brussels I Regulation ^[12], and subsequently by the Brussels-I bis Regulation ^[13].

Many researchers believe that the success of the 1968 Brussels Convention concluded between the EEC member states is due to the fact that its developers combined in this international treaty issues of jurisdiction and issues of recognition of foreign judgments, stipulating the resolution of the latter first (which allowed it to be called a "double convention") ^[14]. The explanatory report to the 1968 Brussels Convention emphasized the importance of fixing the rules of delimitation of jurisdiction in it, pointed out that the purpose of the 1968 Brussels Convention is to achieve genuine legal systematization by establishing rules of delimitation of jurisdiction common to the participating States, which will ensure the maximum possible degree of legal certainty ^[15].

The Brussels Convention of 1968 acts as an unprecedented multilateral regulator insofar as it combines the regulation of issues of jurisdiction and recognition of foreign judicial decisions. It was the Brussels Convention of 1968 that served as a guiding star for the State Emergency Committee in the development of the 2019 Convention. However, it is precisely the issues of delineation of jurisdiction that have become the main stumbling block in drafting the text of the treaty, because it is one thing to reach agreement on jurisdiction issues within the framework of an integration association that includes a small number of States that often have similar legal systems (in particular, the Brussels Convention of 1968 was concluded by six member States of the EEC: France, Germany, Italy, Belgium, the Netherlands and Luxembourg) and quite another thing is to develop universal rules designed for universal use.

Therefore, the developers of the 2019 Convention implemented a compromise option: without abandoning the delimitation of jurisdiction, they applied the construction referred to in the scientific literature as "indirect international jurisdiction".

The differentiation of jurisdiction into direct and indirect means that national legislation (or international treaties) may stipulate, on the one hand, the powers of a domestic court to consider specific categories of cases with a foreign element and, on the other, rules on jurisdiction, establishing cases when a foreign court decision is subject to recognition. Thus, in the first case, the competence of the national court to consider cases with a foreign element is directly established, hence the term "direct jurisdiction". In the second case, it is stipulated that a foreign court decision is subject to recognition if the rules of jurisdiction specially established for this purpose are observed. At the same time, the national court only indirectly checks the competence of a foreign court, hence the term "indirect jurisdiction".

Consequently, indirect international jurisdiction refers to special rules established solely for the purpose of recognizing foreign judicial decisions. In this regard, Professor D.V. Litvinsky notes that the national court does not have the authority to control the direct competence of a foreign court ^[16]. At the same time, the actual basis on which the court of the country in which the decision was made exercised its jurisdiction does not matter.

With regard to the 2019 Convention, this means that the court, considering a party's application for recognition of a foreign judgment, checks whether the decision was made on the basis of the criteria of jurisdiction that are named in the 2019 Convention. If the decision does not meet these criteria of jurisdiction, the court may refuse to recognize it. At the same time, issues of jurisdiction remain within the competence of the national legislator.

The idea of the developers, of course, is not new. A similar structure, combining the provisions on the recognition of foreign court decisions and on indirect international jurisdiction, has, for example, the Convention on the International Procedure for the Recovery of Child Support and Other Forms of Family Maintenance of November 23, 2007 ^[17].

This approach, of course, has its advantages in comparison with the situation when jurisdiction is not regulated by an international treaty. Among the advantages, we believe it is possible to include, firstly, the predictability of the prospects for exequatur - the interested person will already know at the stage of applying to the court what, from the point of view of jurisdiction, the prospects for the execution of this decision in a foreign state in which, let's assume, there are assets of the debtor. Secondly, indirect international jurisdiction can serve as a guideline for States and contribute to the consolidation of a similar approach to jurisdiction issues in national legislation, i.e. favor the harmonization of law. The developers of the 2019 Convention also aim at this, noting in the explanatory report that, despite the fact that they did not have the task to influence existing national laws on jurisdiction in international affairs, however, court decisions from states whose legislation establishes direct jurisdictional rules similar to the filters contained in the 2019 Convention, they will have a greater potential for circulation in accordance with the 2019 Convention ^[18]

The main disadvantage of the approach enshrined in the 2019 Convention, in our opinion, is the so-called "jurisdictional gap" (in the literature in English "judicial gap") between direct and indirect jurisdiction. We are talking about a situation where the State determines the competence of national courts in cases with a foreign element (direct jurisdiction) on jurisdictional grounds other than those that it recognizes as valid when recognizing foreign court decisions (indirect jurisdiction) ^{[4, p.172]}. In order to understand this phenomenon and to discover the problems associated with it, it is necessary to analyze how the rules of international jurisdiction are fixed in various jurisdictions for the purposes of recognizing foreign judicial decisions.

Summarizing the approaches used in the national legislation of various states, we believe it is possible to distinguish four of their varieties.

The first approach. To determine the competence of foreign courts in order to recognize a foreign court decision, the same criteria of jurisdiction are used that are used by national courts in determining jurisdiction in cases with a foreign element. This technique of regulating international indirect jurisdiction is used, in particular, in Argentina, Germany, Italy, Chile, Japan ^[19]. During the preparation of the 2019 Convention, the Working Group studied the legal systems of 75 States, the stated approach was found in the national legislation of 27 of them ^[20]. For example, according to Article 517 of the Civil and Commercial Procedural Code of Argentina ^[21], a foreign court's decision is subject to recognition if it is rendered by a competent court, while competence is subject to determination in accordance with the Argentine norms of international jurisdiction. E.V. Mokhova calls this method the "mirror test", since "the domestic court mirrors the procedure for determining its competence on a foreign court" ^{[5, p. 190]}. It should be noted that this approach is implemented in the international treaty concluded by the member States of the Mercosur Integration Association (the name of the treaty) (Argentina, Brazil, Paraguay, Uruguay) ^[22], as well as in the Inter–American Convention on the Extraterritorial Validity of Foreign Judicial and Arbitral Awards of May 8, 1979, ^[23] by the participants which are 10 states of both American continents.

During the development of the 2019 Convention, this approach, characterized by fairness, based on the non–discriminatory principle - if a rule of jurisdiction is recognized by a State as acceptable, then it should be recognized as acceptable in relation to other States, was proposed, but the proposal did not find support ^{[10, p. 12]}. Obviously, with an undoubted advantage, such regulation of indirect international jurisdiction would be inferior to the presentation of common jurisdictional filters for all states directly in the text of the 2019 Convention, reducing the predictability of the result of the court's resolution of an application for recognition of a foreign court decision. The litigants would be forced to analyze the provisions of the legislation of a foreign state on international jurisdiction in which enforcement of the decision is necessary before applying to the court. The situation looks even more complicated when filing a lawsuit against several defendants whose assets may be located in several states.

Criticizing this criterion for determining international jurisdiction, which is reflected in international agreements of the countries of the Americas, the Uruguayan doctrine draws attention to the low level of protection of the plaintiff's rights: having received a positive judicial decision in due process, the plaintiff may subsequently lose his rights if it is not recognized in the State in which its enforcement is required on the basis that it was issued by a court that, in accordance with the legislation of this country, does not have jurisdiction to consider such cases, despite the fact that at the time of its consideration, the case may have been absolutely unrelated to the State in which its execution is requested ^[24].

The second approach involves a reference to foreign law. The competence of a foreign court is checked in accordance with the norms of the law of the State in which the decision was made. Such regulation is established, in particular, in the national legislation of Brazil, Lebanon, Uruguay ^{[20, p. 3]}.

The third approach. The competence of national courts in cases with a foreign element is defined more broadly than the recognized competence of foreign courts (for example, in Australia, Great Britain, Norway, Switzerland), which is a situation of a jurisdictional gap. At the same time, the national legislation directly establishes jurisdictional filters for the recognition of foreign judicial decisions and provisions on the jurisdiction of national courts, or these legal filters are not directly named, but national legislation does not allow the recognition of foreign judicial decisions, except when provided for by an international treaty containing provisions on indirect international jurisdiction. The described campaign was discovered by the working group in 23 States. The developers of the 2019 Convention note that this approach contradicts the international legal principles of justice and negatively affects the predictability and effectiveness of transnational justice ^{[20, p. 3]}.

The fourth approach. National legislation does not regulate issues of indirect international jurisdiction. Among the States using this approach are, in particular, Azerbaijan, Belarus, Spain, China, Portugal and Russia. The possibility of recognizing a foreign court decision in the Russian Federation is limited by the provisions on the exclusive jurisdiction of cases involving legal entities (Article 248 of the APC of the Russian Federation, Article 403 of the CPC of the Russian Federation), which the court is limited to checking during the proceedings on the recognition of a foreign court decision.

Having carried out extensive work on studying the national legislation of potential parties to the 2019 Convention, its developers preferred to fix indirect jurisdictional filters in it (Article 5 of the 2019 Convention). Unification of indirect jurisdiction according to the model of the 2019 Convention, as E.V. Mokhova put it, "preserves, legitimizes and, in fact, freezes" the jurisdictional gap ^{[5, p . 190]}. This means that national courts can still consider cases guided by their national legislation on issues of international jurisdiction, while the criteria of jurisdiction may be broader than the criteria of jurisdiction established in the 2019 Convention. Sometimes the grounds of international jurisdiction established by national legislation may be excessive. For example, E. Jueptner draws attention to the most notorious excessive grounds of direct jurisdiction contained in Article 14 of the French Civil Code, which allows French courts to exercise international direct jurisdiction over a defendant located outside the State only on the grounds that the defendant entered into business relations with a French citizen ^[25].

The legal consequences of joining the 2019 Convention are not the same for States and depend on the approach implemented in their national legislation to the regulation of indirect international jurisdiction, as well as on the ratio of the scope of competence of national courts according to national legislation and the jurisdictional filters established in the 2019 Convention.

In particular, the following situation may arise.

If in the State in which the judgment was rendered (State A), the criteria of jurisdiction established for national courts are broader than in the State of the court in which enforcement is requested (State B), and the scope of the recognized competence of foreign courts does not exceed that provided for by the 2019 Convention, the following consequences arise.

The court of State B will not be able to refuse to recognize a judgment rendered in State A (because the jurisdictional filter under the 2019 Convention has been passed). At the same time, in a similar situation, the court of State B will not have jurisdiction to consider the case, since it will determine it on the basis of narrower criteria of jurisdiction established in its national legislation.

It is unlikely that this state of affairs is in the interests of our state, given that the criteria of international jurisdiction in the Russian Federation are narrower than the criteria of indirect jurisdiction established by the 2019 Convention.

The difference can be seen when comparing Article 247 of the APC of the Russian Federation and Article 5 of the Convention. For example, paragraph 1 (f) of Article 5 of the Convention contains a provision according to which a decision of a foreign court may be recognized if the defendant objected on the merits of the claimed claims in the court of origin, without challenging jurisdiction within the time limits provided for by the law of the State of origin, except in cases where it is obvious that objections to jurisdiction or to the exercise of jurisdiction would not have been crowned with success in accordance with such a right. Thus, the passage of this jurisdictional filter will be sufficient for the recognition by the court of the Russian Federation of a foreign decision made by the court in a case that has no connection with the state of the court and the law of the country of the court.

At the same time, a court in the Russian Federation in a similar situation does not have the right to consider such a case, since the corresponding basis of jurisdiction is not provided for by the procedural legislation of the Russian Federation, including Article 247 of the Administrative Code of the Russian Federation.

And, on the contrary, the conclusion of the 2019 Convention on the proposed conditions of indirect international jurisdiction corresponds to the interests of States in which the third approach is applied, i.e., for example, Great Britain, since, on the one hand, it will allow the widest possible implementation of the competence of national courts (limited only by the criteria of indirect jurisdiction of the 2019 Convention) and obtain a guarantee of recognition of the decisions made by them outside the country, and, on the other hand, will not create an equivalent obligation with respect to judicial decisions of other states, given the lack of a legal instrument at their disposal for consideration by courts in the same volume of cases with a foreign element.

It should also be noted that States whose national legislation is not familiar with the institution of indirect international jurisdiction have the opportunity, nevertheless, to limit the excessive "expansion" of foreign courts through the concept of public order known to many legal systems. A provision on its contradiction to the public policy of the State in which recognition is requested may be used as a basis for refusing recognition of a foreign decision. In the Russian Federation, for example, see paragraph 7, part 1 of Article 244 of the APC RF: the arbitration court refuses to recognize and enforce a foreign court's decision in whole or in part if the execution of a foreign court's decision would contradict the public policy of the Russian Federation. By assuming convention obligations, States acquire indirect jurisdictional filters, i.e. special legal regulation on issues of international jurisdiction, and lose the right to appeal to the rules on public order.

As a measure to increase the competitiveness of the jurisdiction of the Russian Federation, it seems necessary to introduce into national legislation legal norms on indirect jurisdiction that consolidate the recognized competence of foreign courts to the extent not exceeding that which defines the competence of national courts to consider cases with a foreign element.

Under the current legal regulation, the accession of the Russian Federation to the 2019 Convention will have the following, which we assess as unfavorable, legal consequences in relation to issues of international jurisdiction: accession will create new obligations for the Russian Federation to recognize foreign court decisions, despite the fact that the competence of Russian courts recognized by foreign states will not change.