PRC Signs Hague Convention on Choice of Court Agreements

China brick wall flag
Is the resolution of disputes with Chinese entities about to get easier? That’s one conclusion that can be drawn from the recent signing of the Hague Convention by the People’s Republic of China (PRC).

The Convention is designed to promote international trade and investment by providing greater certainty for parties to commercial contracts involved in cross-border litigation. It creates a framework of rules relating to jurisdiction agreements and the subsequent recognition and enforcement of a judgment given by a court of a contracting state designated in a choice of court agreement. The other parties to the Convention, to date, are Mexico, the countries of the European Union (except Denmark) and Singapore. The USA and Ukraine have signed the Convention but not yet ratified it.

If and when ratified by the PRC, the Convention will provide an important new tool for international entities contracting with Chinese entities and vice versa. Where the parties to a commercial contract, including insurance and reinsurance contracts, can agree on an exclusive choice of court, the Convention will help to ensure that disputes are resolved more swiftly and with greater certainty.

A word of warning for Hong Kong entities and those involved in disputes with them: international treaties acceded to by the PRC are not automatically binding on Hong Kong. All is not lost, however, since there is a special arrangement between the PRC and Hong Kong which means that a judgment obtained in Hong Kong is enforceable in the PRC and vice versa.

Kelvin Lee