On 14 April 2016, Singapore Parliament enacted the Choice of Court Agreements Act 2016 ("CCAA"), which provides for the implementation into Singapore law of the 2005 Hague Convention on Choice of Court Agreements ("Hague Convention"). Singapore ratified the Hague Convention on 2 June 2016, and it will come into force on 1 October 2016.
The Hague Convention establishes an international legal regime for upholding choice of court agreements in international civil or commercial cases among contracting states ("Contracting States"). One of the most significant effects of the Hague Convention is that court judgments emanating from a Contracting State must now be recognised and enforced in another Contracting State, subject to very limited exceptions. This note focuses on this latter enforcement aspect of the Hague Convention.
EU judgments can now be enforced in Singapore
When the Hague Convention comes into force in Singapore on 1 October 2016, the number of countries with which Singapore has reciprocal arrangements for the enforcement of judgments will increase significantly. There are currently 11 countries recognised under the Recognition of Commonwealth Judgments Act ("RECJA") and the Recognition of Foreign Judgments Act ("REFJA"). After 1 October 2016, the number of countries will increase to 39.
The European Union ("EU"), with the exception of Denmark, forms the main bulk of the countries that have ratified the Hague Convention.
Enforcement of EU judgments under the CCAA
Broadly, where a foreign judgment is valid and enforceable in the Contracting State in which it originated, it will be recognised and enforced by other Contracting States. There are limited grounds on which the Singapore courts may refuse to recognise or enforce such a judgment. Examples include where the foreign judgment was obtained by fraud, or where recognition and enforcement would be against public policy.
While the rules governing enforcement under the CCAA have not yet been published, it is anticipated that it will be fairly straightforward, requiring an application to court together with a supporting affidavit exhibiting the foreign judgment and stating that it is enforceable in the original jurisdiction.
Scenarios where the Hague Conventionmay be relevant
Some scenarios where the Hague Convention would apply include the following:
- Where parties to a transaction are from a Contracting State or have assets in a Contracting State
- Where parties choose a court in a Contracting State as the exclusive forum for disputes
- Where parties to a dispute have assets in a Contracting State
Differences between Enforcement under the CCAA and RECJA / REFJA
CCAA does not require judgment of a superior court: Unlike the RECJA and REFJA, the Hague Convention regime is not restricted to judgments emanating from superior courts of Contracting States. Any court of a Contracting State chosen by the parties as the exclusive forum for their disputes will fall within the ambit of the Hague Convention. This will include the equivalent of the State Courts in Singapore.
Enforceability of non-monetary judgments: A significant difference between the CCAA framework and the RECJA/REFJA is that non-monetary judgments may be enforced under the Hague Convention, whereas under the RECJA and REFJA, only judgments for payment of a monetary sum are enforceable.
No legalisation / apostille needed: The Hague Convention expressly provides that all documents forwarded or delivered under it are exempted from the legalisation / apostille process. This would mean cost and time savings for parties.
The Hague Convention versus the New York Convention
The Hague Convention often draws comparisons to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards ("New York Convention"). In many ways, they share conceptual roots, except that the Hague Convention applies to litigation, while the New York Convention applies to arbitration.
However, there are a number of key differences between the New York Convention and the Hague Convention.
Membership: There are currently 156 countries that have acceded to the New York Convention, compared to 28 under the Hague Convention. However, if the United States (which has been a signatory of the Hague Convention since 2009) chooses to ratify, this may signal a future wave of signatories and ratifications to the Hague Convention.
Exclusions: The Hague Convention applies only to international civil or commercial disputes. It excludes family and probate, insolvency, competition and anti-trust, personal injury, property damage (not arising from a contractual relationship), and intellectual property rights (other than copyright). These exclusions are reflected and adopted in the CCAA.
In contrast, the New York Convention does not contain any similar exclusion in terms of party or subject matter. A dispute may be arbitrated if it is "arbitrable" accordingly to the law of the seat of the arbitration proceeding. In Singapore, the International Arbitration Act does not contain a comprehensive list of what is not arbitrable, but does exclude matters which are contrary to public policy or capable of settlement by arbitration. The courts have interpreted this to include family and probate disputes and certain insolvency-related matters.
Interim measures: Neither the Hague Convention nor the CCAA applies to an interim measure of protection. This means that interim orders by a foreign court, unlike final orders, cannot be directly enforced. The New York Convention does not exclude the enforcement of interim measures of protection. In fact, in Singapore, the International Arbitration Act specifically allows for the enforcement of both interim and interlocutory awards as well as final awards. The International Arbitration Act also allows the Singapore courts to grant interim orders in support of arbitral proceedings.
Arbitration versus Litigation: Reliance on the New York Convention or the Hague Convention of course depends on whether the parties have chosen arbitration or litigation as a dispute resolution mechanism.
Broadly speaking, the appeal of arbitration lies largely in the confidentiality of proceedings, and well as the flexibility of the arbitral process. Parties are also able to select their own arbitral tribunal and appoint experts with specialist knowledge.
Parties opting for litigation often do so because of the advantages of the court structure. The court tends to have a greater range of powers on joinder and consolidation, and parties who are dissatisfied with a judgment usually have the option of an appeal on the merits of the judgment, which is not available in respect of an arbitration award. Further, in certain jurisdictions, the litigation process can be more cost and time efficient.
With the ratification of the Hague Convention, parties who choose to litigate will now have a more encompassing legislative framework to support the recognition and enforcement of foreign court judgments. This should provide parties with greater assurance that the court chosen by them under an exclusive choice of court agreement will determine their dispute, and that the courts in Contracting States will enforce the judgment of the chosen court.
Despite (or perhaps because of) current economic conditions, it is expected that in the long term, the demand for effective international dispute resolution services will grow.
The enactment of the CCAA will undoubtedly provide a more robust framework through which commercial parties may approach the Singapore courts for the resolution of their transnational disputes, particularly those involving EU countries.
The CCAA will also provide a boost to Singapore's position as a dispute resolution hub as there is now greater international recognition and enforceability of Singapore court judgments.