Non-negotiated contracts about to get tough global enforcement support in Hague treaty negotiations

• Non-negotiated contracts about to get tough global enforcement support in Hague treaty negotiations

Right now delegates from dozens of countries are meeting in the Hague, trying to finish the final text of a new treaty called the “Hague Convention on Jurisdiction and Recognition of Foreign Judgments.”

The effort to create a global treaty on jurisdiction for cross border civil litigation has always been stuck between the older pre-Internet thinking about jurisdiction, and the current reality of hyperactive globalization of knowledge goods and services.

The treaty as currently formulated has been shrunk to one concerning the choice of court provisions in contracts, and the enforcement of judgments that stem from those contact disputes.

Over and over again the delegates talk about the need to enforce agreements freely negotiated between willing parties. But the biggest issue in the treaty is the issue of non-negotiated contracts.

At this point the US government and the European Union, lead by Tony Blair’s UK delegation, are pushing relentlessly to give non-negotiated contracts the same status in the Convention as contacts that are actually negotiated between parties. The highly ideological UK delegation is pushing its “freedom on contract” position, and the US government position appears to be controlled by a handful of giant software and publishing entities that want to use take-it-or-leave-it contracts to write their own intellectual property rules, eliminating traditional limitations and exceptions to rights in patent or copyright laws, and also extending rights to materials in the public domain or owned by others. Beyond this, the strict enforcement of non-negotiated contracts will apply to a plethora of other transactions – basically anything where the seller may want to bind the buyer, through a contract of adhesion.

Officially, the treaty excludes contracts involving personal household use. But virtually any contract involving a non-profit organization, a library, school, small business, software developers, or about anything you would buy in connection with your job, would be covered.

By tying together both negotiated and non-negotiated contracts, the treaty is likely to be controversial, and some countries will probably not sign on this issue alone. While the basic approach to the treaty is similar to the Brussels Convention, which addresses similar issues in Europe, this new treaty is open to any country to sign ---- giving sellers huge opportunities to forum shop. This means people will be automatically subject to litigation in jurisdictions that have nothing to do with the business transaction, simply because the seller likes the local courts. While this might make some sense for cases where contracts are actually negotiated, it is a terrible policy for non-negotiated contracts.

Is the Convention fixable? Of course, if delegates wanted to. They simply have to exclude contract for which both parties do not have a reasonable opportunity to propose substantive terms. This would ensure that truly negotiated contracts would benefit from the greater certainty of enforcement, but eliminate the highly predictable abuses that will happen when non-negotiated contracts are covered. Right now, things look bleak, as the US/EU lead by the UK, are pressuring Australia an other negotiators to go alone with their plans to cover all contracts, negotiated or not,. Some think this will a doom an otherwise useful treaty.

-- 
James Love, Consumer Project on Technology, http://www.cptech.org,
mailto:love[_at_]cptech.org

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