EN    EN EN 
 
EN    EN  COMMISSION OF THE E UROPEAN COMMUNITIES 
Brussels, 5.9.2008 
SEC(2008) 2389 
  
COMMISSION STAFF WORKING DOCUMENT 
Accompanying the   
 
 
Proposal for a Council Decision 
 
on the signing by the European Community  of the Convention on Choice-of-Court 
Agreements 
  
IMPACT ASSESSMENT 
 
{COM(2008) 538 final} 
{SEC(2008) 2390} 
 
EN 2   EN 1. PROCEDURAL ISSUES AND THE CONSULTATION OF INTERESTED PARTIES  
Agenda planning reference number: 2008/JLS/196 
1.1 Procedural issues 
This Impact Assessment was prepared on the basis of a “Study to Inform an Impact 
Assessment on the Ratification of the Hague Convention on Choice-of-Court Agreements by 
the European Community”, which was undert aken for the Commission by an external 
contractor1 with input from the Inter-Service St eering Group convened by the Directorate-
General for Justice, Freedom and Security. Repr esentatives of the Lega l Service, Secretariat-
General, DG ENTR, DG MARKT, DG SANCO and DG INFSO participated in the work of the Inter-Service Steering Group. 
This Impact Assessment was reviewed by the Impact Assessment Board (IAB). The 
recommendations for improvements have been accommodated in a revised version of the report. In particular, the following changes were made: 
The baseline scenario has been assessed in more  detail end provides an  overview of existing 
dispute resolution procedures rele vant in the field (court set tlements, ADR and international 
arbitration) which set out their advantages and shortcomings. Regrettably, there exist no 
comprehensive and reliable data on the cost s and length of dispute settlement procedure 
available.  
Point 5.2 has also been expanded also to inform on the status of ratification process of the 
Convention.  
The report explains further the reasons for exem pting the copyrights and related rights (option 
6 a) and insurance sectors (option 6 b)  (additions made to points 5.7 and 5.8).  
1.2 Consultations of interested parties 
This impact assessment was based on the abovementioned study, a review of the literature, 
analysis of the responses to  the Commission’s 2004 Consultation Paper in preparation for the 
final round of negotiations at the Hague
2, reviews of the results of surveys undertaken by the 
International Chamber of Commerce (ICC)3 and the American Bar Association (ABA)4 as 
well as analysis of trade statistics (from Eu rostat). The choice of American surveys was 
motivated by the fact that poor information exists on the practice  of choice-of-court 
agreements at European level.  The agreements which are the subject of the Convention are 
international and so the opinions and (potenti al) behaviour of non-EU economic partners may 
contain valuable information. 
                                                 
1 GHK Consulting Ltd, Birmingham; study available at 
http://ec.europa.eu/dgs/justice_home/evaluation/dg_coordination_evaluation_annexe_en.htm  
2 For overview of responses see Annex 1. 
3 ICC Survey regarding business practices on jurisdictional issues (2003) 
http://www.iccwbo.org/law/jurisdiction/  
4 Survey conducted by the ABA Section of International Law (ABA Working Group on the Hague 
Convention on Choice-of-Court Agreements) in October/November 2003. 
 
EN 3   EN As a complement to the review of existing information, consultations with companies, 
insurance companies, business or ganisation and law firms on the va rious elements involved in 
current choices of court agreements and the implementation of these agreements were undertaken by the external contractor for the study. 
In total more than 500 companies, eight insu rance companies, seven business organisations 
and nine law firms were contacted during the study. However, only 27 interviews were 
carried out as difficulties were encountered with identifying companies trading with extra-EU markets and who, within these companies, was able to comment on the use of choice-of-court 
agreements. Also, companies were often reluctant to provide this kind of information or to 
take part in the interview. 
Consequently, a total of 21 companies were  interviewed on the use of choice-of-court 
agreements and the problems linked to them. The initial sample of companies to be 
interviewed reflected a geographi cal and sectoral spread. However, due to the low response 
rate and engagement of companies, more in terviews were undertaken with French and 
Belgian companies (19 interviews were undertaken  in both countries), which showed a greater 
interest in participating in the survey. More over, two insurance companies were interviewed 
and two questionnaires, filled in by the Ag ency of Lithuanian Copyright Protection 
Association and the British affiliate of the I CC, were forwarded respectively by GESAC (the 
European Grouping of Societies of Authors and Composers) and the ICC. Moreover, two law 
firms (based in Portugal and Finland) c ontributed to the study through interviews. 
2. P
ROBLEM DEFINITION  
2.1. Policy context 
Matters of internationa l jurisdiction of courts  and recognition and enforcement of judgments 
in civil and commercial matters are governed  within the European Community by Council 
Regulation (EC) No 44/2001 of 22 December 2 000 on jurisdiction and the recognition and 
enforcement of judgments in civil and commerci al matters (referred to as the “Brussels I 
Regulation”)5 which replaced the 1968 Brussels Conven tion of the same name as of 1 March 
2002. The provisions of that Regulation are curr ently applicable in all 27 Member States6. 
The Regulation covers issues concerning the jurisdiction of the courts of European 
Community Member States, and the mutual recognition and enforcement of judgments 
between Member States for the whol e area of civil and commercial law7, with the specific 
                                                 
5 OJ L 12, 16.1.2001, p. 1. 
6 Even though Denmark, in accordance with Articles 1 and 2 of the Protocol on the position of Denmark 
annexed to the Treaty on European Union and to the Treaty establishing the European Community, did 
not adopt the Regulation and the Regulation does not apply to it, Denmark is bound by the provisions of the Regulation by virtue of the Agreement between the European Community and the Kingdom of 
Denmark on jurisdiction and the recognition and en forcement of judgments in civil and commercial 
matters (OJ L 299, 16.11.2005, p. 62). 
7 Community instruments adopted in certain specialised areas of civil and commercial law which contain 
specific rules on international jurisdiction and/or mutual recognition and enforcement of judgments make reference to the general applicability of the Brussels I Regulation. For instance, Council 
Regulation (EC) No 40/94 of 20 December 1993 on  the Community trade mark and Council Regulation 
(EC) No 6/2002 of  12 December 2001 on Community designs. 
 
EN 4   EN exclusion of family law (except for maintena nce obligations), bankruptcy and insolvency, 
social security and arbitration. 
The Regulation also specifically deals with the issues of jurisdiction based on choice-of-court 
agreements and subjects the re sulting judgments to the benef its of mutual recognition and 
enforcement under the Regulation. 
According to the case law of the European Court of Justice8, issues related to international 
jurisdiction and recognition and enforcement of judgments with respect to third countries 
come under exclusive external Community competence. 
2.1.1.  Current legal situation in respect of third countries 
The current legal situation with respect to third countries in th e field in question is, however, 
very variable. The only international agreement concluded in this field so far between the 
Community and third countries  is the new Lugano Conventi on on Jurisdiction and the 
Recognition and Enforcement of Judgment s in Civil and Commercial Matters9 which was 
signed by the Community but has yet to be ratifie d. It introduces provisi ons virtually identical 
to the Brussels I Regulation a nd thus extends the system of  harmonised rules also to 
Switzerland, Norway and Iceland. 
As regards the other third countries, only a smal l number of bilateral ag reements covering the 
issues in question exist between  some Member States and a limited number of third countries. 
Virtually no treaty relationships exist in this area between the individual Member States and the EC’s main trading partners (such as the USA, China, Russia)
10, mainly because 
negotiation of such treaties woul d be difficult, if not impossi ble, due to different legal 
traditions and those countries having no tr adition of negotiating such agreements11. 
Previous international efforts were not crowned with success12, with the sole exception of the 
now worldwide system of recognition and enfor cement of arbitral awards established by the 
United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards 
of 10 June 1958 .13 
2.1.2.  Consequences of the current legal situation 
The absence of a worldwide (or at least widely  accepted) system of jurisdiction and mutual 
recognition and enforcement of judgments crea tes uncertainty for European companies and 
                                                 
8 Judgment of the Court of 31 March 1971, Case 22-70, Commission v Council — European Agreement 
on Road Transport, Opinion 1/03 of 7 February 2006 on the competence of the Community to conclude 
the new Lugano Convention on Jurisdiction and the Recognition and Enforcement of Judgments in 
Civil and Commercial Matters. 
9 OJ L 339, 21.12.2007, p. 3. 
10 An exception is Russia in that it has a long-standing tradition of concluding bilateral agreements in the 
area of jurisdiction and recognition and enforcement of judgments in civil matters and has such bilateral 
agreements with certain Member States. 
11 Conclusion of such agreements is, however, difficu lt even between countries sharing legal traditions, as 
demonstrated by the example of a bilateral UK-US Treaty on recognition and enforcement of judgments 
in civil and commercial matters which was negotiated in the 1970s, but was subsequently never ratified. 
12 The latest attempt at negotiating a worldwide convention on jurisdiction and recognition and 
enforcement of judg ments in civil and commercial matters w ithin the Hague Conference on Private 
International Law failed in 2001. 
13 Although this convention had a very difficult start, it now has 142 Contracting Parties. 
 
EN 5   EN entrepreneurs as to which court will have juri sdiction in a potential dispute arising from a 
contractual relationship with a party in a third country. Th is uncertainty may have a 
dampening effect on international trade14. 
The lack of certainty as to th e applicable jurisdictional rules, depending on the national rules 
of individual countries, can be  overcome by the parties to th e dispute by their agreeing to 
designate a court which will have jurisdiction to adjudicate their dispute. Such party autonomy is, however, undermined by the lack of worldwide rules which would guarantee to 
the parties that: 
• their choice of a court in a certain country  will be respected by the courts in other 
countries, and that 
• the resulting judgment given by the chosen c ourt will be eligible for recognition and 
enforcement in a country other than the country of the chosen court. 
As a result of this s ituation, businesses today usually opt for alternat ive methods of dispute 
resolution (mainly arbitration) to try to so lve their internationa l disputes, since the 
abovementioned existing worldwide system of r ecognition and enforcement of arbitral awards 
offers relatively high predictability. 
2.1.3.  The Convention on Choice- of-Court Agreements 
The Convention on Choice-of-Court Agreements concluded on 30 June 2005 at the Twentieth 
Session of the Hague Conference on Private Inte rnational Law (referred to below as ‘the 
Convention’) is designed to offer greater certai nty and predictability for parties involved in 
business-to-business contracts and internationa l litigation by creating an optional worldwide 
judicial alternative to the existing arbitration system. 
The European Commission negotiated this Conv ention on behalf of the European Community 
on the basis of a Council Decision. 
Due to the active par ticipation of the USA, Canada, Japan, China, Russia, among a great 
number of other countries, in drawing up th e final text, the Convention has a chance to 
become a viable option for crea ting a basis for the recognition and enforcement of judgments 
resulting from a choice-of-court agreement betw een the EC and these States, provided it is 
widely ratified. 
In view of the general trend in  international negotiations, wher e States prefer to consider 
ratification of existing multilateral international agreements before entering into the commitment of negotiating bilatera l treaties in the same field, it is to be expected that the 
Convention will be the basic instrument of reference when it comes to choice-of-court 
agreements in civil and commercial matters. Th e signing and subsequent  conclusion of the 
Convention by the European Community and other economically strong States would certainly improve the chances of the Convent ion becoming a truly worldwide instrument. 
Conclusion of the Convention by the Community  would also avoid the need to negotiate 
individual bilateral treaties between the EC a nd individual third coun tries, which in itself 
                                                
 
14 A worldwide survey conducted by the International Chamber of Commerce (see footnote 3 for 
reference) states that of 100 leading companies that  took part in the survey, 40 said there had been 
occasions when a significant business decision ha d been determined by ju risdictional uncertainty. 
 
EN 6   EN could lead to an additional level of uncertainty  and complexity since th e individual bilateral 
treaties could contain different  rules applicable to the sa me kind of legal relations. 
Most international contracts do not lead to disputes. Where di sputes arise there are methods 
for resolving them that avoid going to court (m ediation, arbitration, etc. ). Going to court is 
often seen as a last resort because of its perc eived relative high cost, publicity and finality in 
terms of the prospects for future bus iness relations between the parties. 
2.2. Identification of the problem 
International trade is growing and more companie s are taking part in international business. 
As global business expands, the number of business disputes is also on the rise. It can be assumed
15 that: 
• between 92% and 96% of comp anies set up international c ontracts including provisions 
addressing dispute resolution; and 
• between 17% and 50% only of companies’ inte rnational contracts in clude an exclusive 
choice-of-court clause. 
2.2.1.  Lack of legal certainty 
As specified in points 2.1.1 and 2.1.2 above, Co mmunity operators have  no legal certainty 
that a judgment given by a court within the EU, which they chose to deal with their dispute, 
will be recognised and enforced outside the EU, nor that a judgment given by the chosen court 
outside the EU will be rec ognised and enforced within  an EU Member State. 
In addition, where the parties to the dispute agre ed to choose a court (o r courts) of a country 
to have jurisdiction to resolve their dispute, th e existing legal situation does not guarantee that 
their choice of a non-EU court wi ll always be respected by the EU courts, nor that a non-EU 
court will respect their choice of EU courts. This  means that one of the parties of the contract 
may seize a court other than the one chosen by both parties and thus disadvantage the other 
party that relied on the agreement. The court se ized but not chosen may adjudicate the matter 
differently than the court chosen, because  it may apply different substantive law. 
Consequently, the outcome of the dispute may be  different than what was the expectation of 
the parties when they agr eed on the choice of court. 
This lack of legal certainty may function as a “barrier to tr ade”. The ICC survey16 showed that 
global trade is indeed being hampered by compan ies’ uncertainty about which national courts 
might hear a case involving a contested contract . 41% of the companie s surveyed indicated 
that a significant business deci sion of their company had at some point been determined by 
uncertainty regarding the court that would resolv e disputes or the law that would apply to the 
contract. This was more frequent amongst large businesses (47%) than small (26%). 
The conclusion from this is that a company may prefer not to enter into a contract with a 
third-country partner if the issue of which c ourt that will have ju risdiction to decide a 
potential dispute arising from that contract is not sufficiently clear and predictable. As regards 
                                                 
15 Based on results of the ICC survey (footnote 3), ABA survey (footnote 4) and the interview conducted 
for the study. 
16 See footnote 3. 
 
EN 7   EN any choice-of-court agreement included in a contract , this lack of certainty relates to the factor 
that the court chosen by the parties will indeed  be able to exercise its jurisdiction and the 
dispute will not be taken away fr om that court by the fact that a court seized, but not chosen, 
will disregard such choice. 
As the above numbers suggest, small and medium  enterprises may have bigger problems in 
accessing information on risks stemming from tr ade with third countries. Bigger companies 
usually have qualified staff or lawyers providing legal advi ce, while SMEs have smaller 
human and limited financial resources to hire sp ecialised staff. They might therefore enter a 
business relation without full knowledge of risk s associated with a business relation with a 
third-country partner (including consequences of any choice-of-court agreement included in 
the contract), as well as without the means avai lable to reduce these risk s. This situation may, 
however, also lead to the consequence that a small company may prefer not to enter into a 
contract with a larger company in a third c ountry for fear of the unknown risks associated 
with such a contract. 
In the circumstances described, it may seem sufficient that a global arbitration solution exists, 
when trading partners prefer to solve their di sputes by arbitration anyw ay. This, however, is 
only partially true. It depends ve ry much on a series of variables, such as the legal culture 
(trust in arbitration as opposed to courts), contractual bargaining pow er and perception of 
costs (court costs versus costs of arbitrati on). While it is true that large international 
companies will usually not choose a court to se ttle their dispute beca use it would be more 
costly for them, small and smaller companies mi ght take a different attitude. This is true 
especially for situations where the balance of bargaining powers in the c ontract relationship is 
unequal. For a small company with a grievance against a stronger trading partner, the option 
of going to the court in its own country, as opposed to conducting international arbitration 
abroad, is a much better option. Not only from the point of view of costs (hiring a local 
lawyer rather than paying for the costs of a lawyer abroad specialised in international 
arbitration), but also as regards equality of position (courts are pe rceived to be more neutral in 
decision taking, whereas arbitration is  “forcing” them to compromise). 
2.2.2.  Protection of Community legal values 
Through its legislation and case law the Community  has developed a certain set of values in 
the field of civil and commerc ial matters, and any activities undertaken by the Community in 
respect of third countries shoul d reasonably respect these values , in particular values which 
are of such importance that th ey must be protected also ou tside the European Union. Even 
though there is ultimately a political choice to  be made whether cert ain values must be 
protected in relation to third countries, there are certain lega l values (standards) which by their 
nature demand such protection. 
In the area relevant for this exercise, thes e values are reflected in provisions creating 
exclusive jurisdiction for courts within the EU  Member States as well as in the provisions 
prohibiting or limiting party autonomy  (choice of court) in certain cases, in certain sets of 
legal relations (so called “protective jurisdiction”). 
In addition to the jurisdictional rules mentioned, there might be other areas where the interest 
of the Community to protect ce rtain legal relations beyond the bor ders of the European Union 
might arise. In connection with negotiation of the Convention one particular area was singled 
out as creating difficulties, i.e. the va lidity of copyright and related rights. 
 
EN 8   EN 2.2.2.1.  Protective jurisdiction 
Chapter II of the Brussels I Re gulation contains rules on “protective jurisdiction” in three 
areas: insurance (Section 3), consumer contra cts (Section 4) and individual contracts of 
employment (Section 5). The protective nature of these jurisdictional rules lies in the fact that 
they do not allow the perceived “w eaker” party in the legal rela tion (such as the policyholder, 
consumer or employee) to be forced into a choi ce of court which might be disadvantageous to 
that party. 
2.2.2.2.  Exclusive jurisdiction 
The areas of jurisdiction which fall under the exclusive jurisdicti on of courts in the European 
Union are set out in Article 22 of the Bru ssels I Regulation. Their relevance for party 
autonomy (choice-of-court agreemen ts) lies in the fact that wher e a court within the EU has 
exclusive jurisdiction, the partie s to a dispute should not be able to bypass this jurisdiction by 
their choice of another cour t, be it a court within the EU or in a third country. 
Community instruments containing rules on special venues were an alysed in order to assess 
whether they involve a similar n eed of protection as do the rule s of the Brussels I Regulation. 
These were: 
a) Council Regulation (EC) No 40/94 of  20 December 1993 on the Community trade 
mark; 
b) Council Regulation (EC) No 6/2002 of 12 December 2001 on Community designs; c) Council Regulation (EC) No 585/93 of  12 March 1993 on the implementation of 
promotional and publicity measures in respect of milk and milk products; 
d) Council Regulation (EC) No 1346/2000 of 29 May 2000 on insolvency proceedings; e) Regulation (EC) No 874 /2004 of 28 April 2004 laying dow n policy rules concerning 
the implementation and function of the .eu Top Level Domain and the principles governing 
registration. 
Only Regulations mentioned under (a) and (b) above contain rule s referred to as “exclusive 
jurisdiction”. However, both th ese Community instruments also expressly allow choice-of-
court agreements with reference to the Brusse ls I Regulation. Accordingly, the provisions in 
these Community instruments need to be cons trued as designating or  delimiting the court 
within each Member State rather than in general.  If a court in a Member State is designated by 
choice-of-court agreement, it must be that special court only. These Community instruments were, however, not designed to limit the possibi lity of choice of co urt by the parties in 
general. 
 
EN 9   EN 2.2.2.3.  Copyright and related rights 
Although neither the Brussels I Regulation17 nor other Community instruments adopted in the 
area of copyright and related rights18 establish either exclusive jurisdiction of a court within 
the EU or protective jurisdiction fo r the holders of such rights, in view of the attention paid to 
the issue during negotiation of the Conventi on and by the Community  legislator, these 
intellectual property rights deserve to be taken into special consideration for the purposes of 
this exercise. 
The term intellectual property refers broadly to creations of the human mind. Intellectual 
property rights (“IPR”) protect the interests of the creators/i nventors by givi ng them property 
rights over their creations/inven tions — patents, trademarks, i ndustrial designs, copyright, etc. 
With the exception of ‘copyright and related rights ’, which cover not only literary and artistic 
works but also computer programs, all other in tellectual property right s are excluded from the 
scope of the Convention19. 
Like all intellectual property right s, copyright is also territorial in nature, i.e. protection of the 
authors’ rights is restricted to the State wh ere the right has been created or registered. 
However, the question about the validity and the scope of copyright not only affects the 
rightsholder and his contract pa rtners, but also the users and the whole of society. This is 
because issues such as public in terest and freedom of expression  are involved. In this context, 
decisions about the validity and scope of copyr ight rendered by non-EU courts may directly 
affect Community rightsholde rs’ and users’ interests. 
A recent Intellectual Property Enforcement Survey20 indicated that infringements of IPR are 
very frequent in many third countries. These infr ingements are especially frequent in China, 
the second largest EU trading partner, where the second most common type of IPR 
infringement (after the counterfe iting of trademarks) is piracy. 
The situation is further worsened by the di gitalisation of cultural products and the 
development of the World Wide Web which made piracy easier, in par ticular due to reduced 
costs and the global presence of the Internet . The Internet environment has also made it 
problematic to identify the countri es in which the infringement t ook place, due to the lack of 
physical references such as “borders” and “physical person” in cyberspace. 
At European level, certain aspect s of copyright and related rights21, as well as of 
enforcement22 of these rights, are harmonised. 
                                                 
17 Under the Brussels I Regulation, the general principle of jurisdiction based on the domicile of the 
defendant or jurisdiction based on the place where the harmful event occurred  apply to copyright and 
related rights. 
18 For instance Directive 2006/116/EC of 12 December 2006 on the term of protection of copyright and 
certain related rights, and Directive 2004/48/EC of  29 April 2004 on the en forcement of intellectual 
property rights. 
19 Article 2(2)(n) and (o) of the Convention, “Exclusions from scope”. 
20 Gowers Review of Intellectual Prope rty, The British Copyright Council, 
http://www.britishcopyright.org/ 
21 Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the 
harmonisation of certain aspects of copyright and related rights in the information society; Directive 2006/116/EC of 12 Decembe r 2006 on the term of protection of copyright and certain  related rights; 
Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the legal 
protection of databases, etc. 
 
EN 10   EN At international level, apart from several international conventions in the IPR field23, the most 
comprehensive and effective instrument fo r addressing IPR infringements is the WTO 
Agreement on Trade-Related Aspects of  Intellectual Property Rights (TRIPS)24. The TRIPS 
Agreement is an attempt to narrow the gaps in the way IPRs are pr otected around the world, 
and to bring them under common international rules. The Agreement establishes minimum 
levels of protection that each State has to give to the intellectual property of other WTO 
members by respecting national treatment and mo st-favoured-nation principles. Despite that, 
many differences remain on the scope and measures for enforcing those rights. 
The stakeholders’ replies to the Commission C onsultation Paper during preparation of the 
Convention, the conduct of negotiations at Th e Hague and ultimately the study undertaken by 
the external contractor conf irmed the problematic status of these relations under the 
Convention. 
2.2.2.4.  Situation under the Convention 
As regards protective jurisdic tion (2.2.2.1), Article 2 of the Convention excludes consumer 
contracts and employment contracts from its scope, so the only area covered in terms of 
protective jurisdiction by the Br ussels I Regulation and not ex cluded from the scope of the 
Convention are insurance contracts. 
As regards exclusive jurisdicti on (2.2.2.2.), all fields of exclusiv e jurisdiction recognised by 
the Brussels I Regulation are exclude d from the scope of the Convention25. 
As regards copyright and rela ted rights (2.2.2.3.), the Convention applies to both regarding 
the question of validity of copyri ght and related rights as well as  infringements of such rights. 
Article 21 of the Convention a llows a State with a strong interest in not applying the 
Convention to a specific  matter to make a declaration that  it will not apply the Convention to 
that matter. 
Consequently, the Community could make a declar ation under Article 21 to exclude copyright 
and related rights as well as insurance contr acts from the Convention’s scope of application. 
Were the Convention to be concluded by th e Community without such exclusion, the 
copyright holders from the EU could enter into choice-of-court agreements that could lead to 
cases being heard in the chosen court in a non- EU country and the resulting foreign judgment 
would be eligible for recognition and enforcemen t in the EU as a Cont racting Party to the 
Convention. On the other hand, the exclusion of  copyright from the scope of the Convention 
would make it possible to refuse recognition of such a foreign judgment as there would be no 
international obligation to recognise and enfo rce it. The special jurisdiction provided in 
                                                                                                                                                         
22 Directive 91/250/EEC, Directive 2001/29/EC. 
23 Berne Convention for the Protection of Literary and Artistic Works 1886; International Convention for 
the Protection of Performers, Producers of Phonograms and Broadcasting Organisations 1961; WIPO 
Copyright Treaty 1966; WIPO Performances and Phonograms Treaty 1996, Paris Convention 
for the Protection of Industrial Property 1883, etc. 
24 http://www.wto.org/english/do cs_e/legal_e/27-trips.pdf 
25 Strictly speaking, the C onvention does not exclude expressis  verbis  exclusive jurisdiction for 
enforcement proceeding s (Article 22(5) of the Brussels I Regulation), but there is no doubt about the 
fact that choice-of-court agreements on enforcement jurisdiction are not covered (allowed) by the 
Convention (see definition of a choice-of-court agreement in Article 3(a) of the Convention). 
 
EN 11   EN matters of insurance by Chapter II, Section 3 of the Brussels I Regulation aims to protect the 
weaker party and the economic interests of the general public of the place where the policyholder is located. An exclusive choi ce-of-court agreement unde r the Convention in 
favour of a court in a country which is not the policyholder’s country would, therefore, 
contradict the Brussels I Regul ation and the special provision s covering insurance. Although 
this would not necessarily create a direct legal contradiction between the Brussels I 
Regulation and the Convention, th ere might be conflicts in policy aims if the Convention 
were to be concluded without any exemption on insurance. 
2.3. Summary of problems 
Taking the above analysis into account, four ma in problems can be identified in this area: 
Problem 1
 
The cost of legal uncertainty for EU economic operators that: 
• their choice-of-court agreements in favour of a court outside the EU will be respected in 
the EU; and 
• their choice-of-court agreements in favour of a court in the EU will be  respected in third 
countries. 
Problem 2  
The costs of insufficient foreseeability for economic operators that: 
• a judgment given by the court chosen outside the EU is eligible for recognition and 
enforcement within the EU; 
• a judgment given by the court chosen within  the EU is eligible for recognition and 
enforcement outside the EU. 
Problem 3  
The costs and damage to an EU weaker party in case of insufficient protection due to the 
choice-of-court agreement in fa vour of a court outside the EU (e.g. the choice of a foreign 
court could lead to deprivation of the protec tion provided to the weaker party by Community 
law). 
Small businesses or individuals in the EU dealing with enforcement of intellectual property 
rights and insurance contracts are particularly vulnerable. 
Specific barriers for small bus inesses or individuals are: 
• difficulties in enforcing rights; 
• costs of proceedings; 
• lack of easily accessible and read ily understood specialist knowledge; 
• high level of uncertainty of  success in pursuing a case. 
 
EN 12   EN This may lead to a small business being unwilling to enter into a contract with a larger third-
country company, because it cannot well assess the risks associated with such a contract or it 
may enter into such contract unaware of the risks and thus face adverse effects. 
Problem 4  
Insufficient protection of legal relations specifica lly protected within the EU also in a wider, 
global context The protection of these relatio ns could be undermined by choice-of-court 
agreements in favour of a court in a third c ountry. Problems could aris e for certain specific 
areas in which the EU and its Member States wish or might wish to exercise exclusive 
control. 
The problem associated with this is that a court in a third count ry is not bound by the 
Community rules of exclusive jurisdiction or protective jurisdiction or the rules of substantive Community law, and thus may adjudicate cas es which are of a sensitive nature for EU 
Member States and this possibly in different ways, and potentially produce a different result 
than a court in the EU would arrive at that is potentially of detr iment to an EU party. 
2.4. Scale of the problems identified 
It is difficult to assess the scope of the prob lems identified because there are no relevant 
statistics and the empirical data are limited. Bu t the information available shows that legal 
uncertainty linked to respect for the choice-of- court agreement and enforcement of judgments 
might indirectly influence business decisions. 
As for problem 1, useful information on th e frequency of the problem was provided by a 
survey carried out by the ABA
26. 26.2% of respondents stated that enforcin g a choice-of-court 
agreement designating a court or courts in an international transaction had been difficult, 
while 12.3% of respondents said it had been ex tremely difficult. Moreover, 3.1% stated that 
the problems linked to enforcement had been insurmountable. Difficulties linked to enforcement of choice-of-court agreements seem , however, to affect a minority of economic 
operators, as almost 50% of respondents indi cated that they had not experienced such 
problems. 
On the other hand, problems linked to the r ecognition or enforcement of judgments in 
countries other than the country in which su ch a judgment was rendered (problem 2) often 
arise. Whilst 32% of res pondents to the ICC survey
27 stated that they had not experienced 
such problems, almost 40% stated that obtaini ng recognition or enforcem ent of judgments had 
been difficult. Moreover, 7.4% declared that th is had been extremely difficult and practically 
insurmountable. 
The results of the ABA survey also show that , when asked if economic operators had ever 
successfully enforced a foreign judgment in the USA, 70% of respondents answered 
negatively. Similarly, 62% of respondents answered  in a negative way when asked if they had 
ever successfully enforced a US judgment abroad. 
As for problems 3 and 4, consultations undertaken  have not corroborated that stakeholders 
widely experience such problems. Only one st akeholder reported such problems. Admittedly, 
                                                 
26 See footnote 4. 
27 See footnote 3. 
 
EN 13   EN the results of consultations do not reveal the full scope of th e problems, or problems bound to 
be experienced regularly to a smaller or larger de gree, given that ru les of jurisdiction, 
applicable law and relevant substantive law vary from country to country and are not 
harmonised with the rules existing within the EU. 
3. POLICY OBJECTIVES  
The following general, specific and operational policy objectives reflecting the problems 
analysed in Section 2 have been identified. 
3.1. General objective 
The overall general objective is to address poten tial ‘barriers to trade’ through reducing legal 
uncertainty, i.e. to promote international trade (external to the EU) a nd investment, and this 
by reducing legal uncertainty in commercial contracts. 
3.2. Specific objectives 
The general objective is reflected  in four specific objectives, each  of which is closely related 
to the underlying problems highlighted in Sec tion 2. These specific objectives are the basis 
for the main assessment criteria applied to the individual policy options. 
(1) To increase EU economic operators’ legal cert ainty that their preference for the choice 
of court to resolve international comme rcial disputes will be respected. 
(2) To increase the predictability of the ch oice of court to resolve international 
commercial disputes involvi ng EU economic operators. 
(3) To safeguard EU economic opera tors’ rights in determining the choice of court where 
they are the weaker party. 
(4) To promote the legal rights of EU operators  protected under EU legislation in courts 
resolving international commercial disputes  involving EU economi c operators outside 
the EU. 
The reasoning behind the choice of the sp ecific policy objectives is as follows. 
Specific objective 1 . It would be beneficial if parties to an international contract who entered 
into a choice-of-court agreement could rely on the fact that such ag reement would be upheld 
by the court chosen and by anothe r court seized, but not chosen. 
Specific objective 2 . It would be beneficial if parties to an international contract who entered 
into a choice-of-court agreement could rely on th e fact that the judgment of the chosen court 
would be respected (eligible for recognition and enforcement) in the countries of both parties 
and/or in the country of enforcement. 
Specific objective 3 . It would be beneficial to the Community if the solutions adopted 
safeguarded the rights of EU w eaker parties entering choice-of-court agreements. Achieving 
the objective would both protect the weaker party and also ensure competition through 
increasing smaller companies’ confidence to enter into international contracts. 
 
EN 14   EN Specific objective 4.  It would be beneficial if courts in  third countries were to protect legal 
rights similar to those protected within the EU. Such effects could come about through the 
fact that, in cases involving EU companies in courts of third countri es, arguments made on 
behalf of the EU companies could become an chored in the case law and, consequently, the 
laws of the third countries. Thus even third c ountries would “protect” the interests which are 
being protected within the EU. This would have the potential consequen ce of increasing the 
extent to which EU companies choose to enter into international contracts with parties from 
third countries and hence could lead  to possible increases in trade. 
3.3. Operational objectives: 
There are a number of operational objectives th at can be linked to each of the specific 
objectives: 
Operational objectives linked to Specific objective 1:  
• to increase the number and value of contracts (between EU operators and those in third 
countries) containing a c hoice-of-court agreement; 
• to reduce (preferably eliminate) the instan ces of choice-of-court agreements not being 
respected. 
Operational objectives linked to Specific objective 2:  
• to reduce the uncertainty of outcome of court judgments dependent on the law applied by 
the court adjudicating the matter; 
• to reduce the uncertainty that court judgments might not be respected in other countries; 
• to reduce the uncertainty that cour t judgments would not be enforced. 
Operational objectives linked to Specific objective 3:  
• to reduce the time and costs of resolving disputes in court; 
• to increase smaller companies’ willingness to enter into international contracts with larger 
companies; 
• to increase the likelihood of smaller compan ies challenging larger companies with whom 
they are in dispute. 
Operational objectives linked to Specific objective 4:  
• to reduce differences in the outcome of disputes dependent upon the country in which the 
case is heard; 
• to reduce variation between th e judgments made in EU cour ts and those made in third 
countries. 
 
EN 15   EN 4. THE POLICY OPTIONS  
4.1. Introduction 
The list of policy options inco rporates both legislative and non-legislative proposals and a 
‘status quo’ option where no new proposals would be put forward. 
4.2. The policy options 
Policy option 1  — “passive” status quo 
Under this policy option the Community would not conclude the Convention and no new 
initiatives would be taken to address the policy objectives. 
Policy option 2  — “active” status quo 
Under this policy option the Co mmunity would not conclude th e Convention, but bilateral 
agreements would be negotiated between the Co mmunity and selected third countries which 
would address the policy objectives. 
For the purpose of illustration it is assumed that  bilateral agreements would be negotiated, 
containing provisions equivalent to the substa ntive provisions of the Convention (without 
declarations under its Article 21), between the Co mmunity and the USA, China and the 
Russian Federation, the EU’s three main trading partners28. 
Policy option 3  — provision of “public insurance” 
This policy option would involve support for the provision and costs of insurance to cover the 
costs of proceedings arising from suing or be ing sued in third countries and the financial 
losses to EU operators from rulings made in th ird countries that undermine the rights the EU 
operators would have if they  were operating in the EU. 
Such public insurance, established at EU leve l, would function as a sort of “export credit 
guarantee”. This insurance would be suitable fo r companies trading with third countries. It 
would provide companies with insurance agai nst the risk of not being paid under their 
international contracts. It woul d cover against buyer risks and po litical risks in third countries. 
In the current situation, export credits in Member States can be backed by 
official/governmental support. Offi cial support can take the form of direct credits/financing, 
refinancing, interest-rate support (where the government supports a fixed interest rate for the 
life of the credit), aid financing (credits and grants), export credit insurance and guarantees. 
Export credits are generally divi ded into short-term (usually  under two years), medium-term 
(usually two to five years) and l ong-term (usually over five years). 
                                                 
28 The value of merchandise trade (extra-imports + extr a-exports) of EU25 with the USA amounted to 446 
billion euro, i.e. 18% of the total value of merchand ise trade for 2006. The value of merchandise trade 
(extra-imports + extra-exports) of  EU25 with China amounted to 257 billion euro, i.e. 10% of the total 
value of merchandise trade for 2006. The Russian Federation is the EU’s third biggest economic 
partner. The value of merchandise trade (extra-imports + extra-exports) of EU25 with the Russian 
Federation amounted to 213 billion euro, i.e. 8% of  the total value of merchandise trade for 2006. 
 
EN 16   EN As indicated in a report by the Export Cred its Guarantee Department (ECGD, the UK’s 
official export credit agency)29, there are seven main national agencies providing export credit 
guarantees: CESCE Spain, COFACE Fran ce; ECGD UK; EKN Sweden; ATRADIUS 
Netherlands; EULER HERMES Germany; and SACE  Italy. Their annual  returns range from 
10 billion dollars (EKN) to 2 billion dollars (SACE). They provide export credit guarantees for exports to the majority of  third countries (with the excep tion of Nigeria, Argentina and 
Pakistan). 
Policy option 4
 — provision of information to busin esses on current risks stemming from 
uncertainty in the choice of court 
This policy option would involve support for the costs of providing information to EU 
operators on: 
• the risks stemming from current uncertainties over the choice-of-court agreements, should 
they wish to trade with third countries; and 
• the practical means available to reduce these risks. 
Information could be provided on the website of th e national ministries (T rade or Justice) or 
chambers of commerce. Some Ministries and chambers of commerce (for example the 
Chamber of Commerce and Industry of Pari s) already provide such information on 
international trade and choice-of -court agreements. However, there is no consistency in the 
information provided by the organisations a nd “information packs” are not available. 
In addition to information provided on the Inte rnet on the sites of the main sectoral and 
business organisations, brochures or posters containing the main  messages to be provided to 
economic operators might also be distributed . This information campaign should be as 
decentralised as possible, and lo cal authorities and stakeholders should be involved in order to 
reach a large number of companies.  
The provision of information to business on curre nt risks stemming from uncertainty in the 
choice of court could also be implemented further by developing information campaigns 
towards companies in the EU through the Speci fic Financing Programme Civil Justice.  
Such provisions of information would reduce the legal uncertainty because the business 
would be consciously aware of the legal conse quences of their actions  (e.g. that it is not 
certain whether the court in the chosen country will respect such choice) . This would lead the 
business to verify the private international la w rules of the country in question concerning 
jurisdiction, in order to clarify, if such clauses are respected or not. If the result is negative, 
the business might prefer to c hoose another court (of the countr y of the legal order they know 
for sure). 
Policy option 5  — conclusion of the Convention by the Community without making any 
declaration under its Article 21. 
Article 21 of the Convention a llows a State with a strong interest in not applying the 
Convention to a specific matter to make a d eclaration and thereby exclude such matter(s) 
from the scope of applic ation of the Convention. 
                                                 
29 Report on the Comparison of Export Credit Agencies,  http://www.ecgd.gov.uk/intcompfinal2004.pdf  
 
EN 17   EN Under this policy option, the Community woul d conclude the Conven tion without indicating 
specific exemptions where the Conventi on would not be applied under Article 21. 
Policy option 6a  — conclusion of the Convention by th e Community with a declaration under 
its Article 21 excluding copyr ight and related rights. 
When making a declaration under Article 21 to ex clude copyright and related rights, it would 
be important not to limit this exclusion to copyright holders within  the EU only, as EU 
citizens may not be only holders but also user s (and potential infringe rs) of copyright. The 
objective of this policy option is to protect the EU and its Member States against third countries’ court decisions with an impact on copyright and related rights within the EU. 
Policy option 6b
 — conclusion of the Convention by th e Community with a declaration under 
its Article 21 excluding insurance matters. 
The insurance exemption in this policy option should only go as far as is necessary to address 
this particular conflict with  Community policy. This policy option would therefore involve 
the conclusion of the Conventi on with a declarati on under Article 21 excluding insurance 
matters only if and when the policyholder is do miciled in the EU and the risk or insured 
event, item or property is re lated exclusively to the EU. 
Policy option 7  — combination of policy options 6a and 6b. 
This policy option would involve the conclusion of the Convention by th e Community with a 
declaration under Article 21 excl uding copyright and related ri ghts as well as insurance 
matters form the scope of the Convention. 
5. THE IMPACTS OF THE POLICY OPTIONS  
5.1. Introduction 
This Section outlines the main advantages and disadvantages of each policy option in terms of 
their social and economic impacts30 on different target groups , risks and trade-offs. 
A common grid has been used for systematic comparison of the policy options. Each of the 
policy options outlined in Section 4 and their co mponent actions has been assessed against the 
following criteria: 
• The impacts with respect to the four specific policy objectives — i.e. how far does the 
action contribute to making progre ss in achieving each objective? 
• What are the potential economic benefits to the EU? 
• What are the preconditions and essential accompanying measures? 
• Is there complementarity with existing (and forthcoming) acquis? 
                                                 
30 Environmental impacts have not been considered. However, achieving the general objective would have 
repercussions through increasing the volume of international trade. 
 
EN 18   EN • What are the main economic and social impacts in the EU and third countries? 
• What are the costs for the Community? 
For each policy option, the anticipated impact with  respect to the assessmen t criteria related to 
the four specific policy objectives  has been assessed on an ‘intui tive’ scale of positive impact 
from √ to √√√√√  (√√√√√  being the best possible score). Also, the views expressed by the 
stakeholders have been included in the assessment of each policy option. 
5.2. Policy option 1 — ‘passive’ status quo 
As indicated in Section 2, the absence of a worldwide system of jurisdictional rules and rules 
on recognition and enforcement in civil and commercial matters causes a number of problems. 
The existing legal disputes settlement procedures in international commercial relations are 
court settlement, alternative dispute resolutio n (so-called "ADR"), such as mediation and 
recourse to internationa l commercial arbitration. 
Recourse to national courts to regulate commerci al disputes is the most traditional method in 
use in all judicial systems. Its main advantage is  that it confers the certainty of enforcement of 
the decision given in the forum.  But this advantage varies c onsiderably from one State to 
another in terms of periods of time and proce dure costs, depending on the effectiveness of the 
judicial system. On the other hand, in intern ational sphere, recourse to courts comprises 
certain disadvantages which enabled internationa l commercial arbitration to develop: with the 
exception of international recogni tion agreement, the effectivene ss of the judicial decisions 
given in a state is limited to its territory. This  is why States have de veloped bilateral then 
multilateral conventions, in particular under the auspices of The Hague Conference of Private 
International Law for the recognition and enforcem ent of judicial decisions. In the European 
context, since 1968, Member States adopted th e Brussels Convention on the recognition and 
enforcement of judicial decisions which fac ilitates free movement of commercial judgments 
among themselves and which were replaced  in 2000 by Regulation n° 44/2001 having the 
same object and which even more reduces the intermediate measures for enforcement of decisions. This regulation cont ains a provision which guarantees the exclusivity of choice of 
court clauses for commercial contracts and en sures the recognition of  the decisions given 
within this framework in the Union. However, this regulation applies only if the clause was 
concluded between parties one of which at leas t has its residence in the Union. The Member 
States and the States of EFTA conclude d on 16 September 1988 the Lugano Convention on 
the recognition and enforcement of decisions in civil and commercial matters, which is a 
parallel agreement to the Brussels Convention of 1968.  
On the other hand, there exists no agreement on the recognition and enforcement of court 
decisions in commercial matters at worldwid e level. The Hague conv ention of 1 February 
1971 on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters never entered into force. The negotia tion of a global instru ment on international 
jurisdiction and the recognition and enforcement of judicial decisions, which comprised a 
provision on choice of court cl auses, failed after a diplomatic conference in 2001. It is from 
this failure that the more limited project on a global Hague Convention on Choice-of-Court 
Agreements of 2005 arose.  
 
EN 19   EN Recourse to the friendly methods of re solution of settlement of the disputes  is relatively recent 
and is still developing. Certai n contracts envisage indeed op tional or mandatory preliminary 
recourse to mediation before referring to natio nal or arbitral courts. The main advantage of 
mediation is that it makes it possible to ma intain business relationships between economic 
partners and that it is more flexible than ju dicial proceedings. It a llows recourse to more 
imaginative and less legal solutions. It is not a without any costs procedure since the mediator 
has often to be remunerated. The general cost s of mediation, according to CMAP (Centre de 
Mediation et d'Arbitrage de Pa ris), are in the rang e of 1,000 to 4,000 Euro which is affordable 
for SMEs. It comprises neverthe less also important disadvantages  in international trade: the 
quality of the mediators is not always guarant eed. Secondly, its develo pment is restricted by 
legal uncertainty which surrounds it at three le vels: non recognition of c onfidentiality of the 
mediation elsewhere, risk of e xhaustion of legal prescription peri ods in courts in the event of 
recourse to mediation and non recognition of th e mediation agreements at global level. A 
Recommendation on Civil Mediation has been a dopted under the auspices of the Council of 
Europe which has no prescriptive value. Upon initiative of the Co mmission, the European 
Parliament has adopted a Directive on Civil Mediation in April 2008, the rules of which 
intend to remedy these three disa dvantages, but its scope is limited to procedures within the 
EU. Therefore, it appears that mediation is surrounded by legal uncertainty for companies in 
international trade, as, in particular, the fu ll enforcement of mediation agreements, although 
by recourse to courts themse lves, cannot be guaranteed.  
International commercial arbitration is current ly, by default, the most widespread dispute 
settlement method for international commercial  disputes. Internationa l arbitration clause 
contracts have to be respected and the arbitral award can be enforced by virtue primarily of 
the Convention on the Recognition and Enforcement of Foreign Arbitral Awards - the "New York" Convention in the States having ratified it
31. But, arbitration is nevertheless also a 
rather expensive commercial dispute resoluti on to which large comp anies have recourse 
because the fees charged by spec ialized lawyers or arbitrators might be high or sometimes 
excessive32.  
But, it is precisely why these advantages have to be mitigated with regard to effectiveness of 
court settlement systems with which it is in competition, since arbitration also borrows some 
of its procedural mechanisms from judicial pr oceedings (e.g.: designation of the arbitration 
court, preparation of the cases and hearings with  specialized lawyers, form of the awards of 
the arbitrators..).  
In this regard, since 2000, the United Natio ns Commission on International Trade Law 
(UNCITRAL) has examined a number of ques tions concerning arbitr ation considering it 
likely to be the subject of future work, incl uding questions not dealt with by the New York 
Convention and problems encountered in practi ce but not treated in the existing texts on 
arbitration (for example: the questions of the ar bitrability of the dispute, the possibility of 
enforceability of an award that has been se aside in the State of origin, the provisional and 
                                                 
31 142 States are Parties to this Convention,  including all Member States of the EU 
32 See point 20 of Document n° A/CN.9/646 of the Report of the Working Group on Arbitration and 
Conciliation on the work of its forty-eighth session (New York, 4-8 February 2008) United Nations 
Commission on International Trade Law 
http://www.uncitral.org/uncitral/en/commi ssion/working_groups/2Arbitration.html 
 
EN 20   EN conservative measures, the electr onic clauses, whether the arb itration agreement was null and 
void or could not be performed etc…33). 
For most of these questions, th e dispute settlement system of  the Choice-of-Court Convention 
presents many advantages. For example, the uncer tainties as to whether the subject matter of 
some dispute was capable of arbi tration (the arbitrab ility of the dispute), has caused problems 
in international commercial arbitration. On  the contrary, the Choice-of-Court Convention 
provides the parties a clear delimitation of the ma tters that could be subject to a valid choice. 
In particular, the proceedings are not excluded from the scope of the Convention by the mere 
fact that a State, including a governmental agency  or any person acting for a State, is a party 
thereto.  
Moreover, the court settlement system of the Convention has the advantage of render possible 
the concentration of the procedur es in a single court. Arbitra tion, which is private justice, 
cannot totally perform without re course to State courts for important remedies such as for 
example the nomination of the arbitrator in case  of a dispute between the parties, for solving 
differences on the validity of th e arbitration convention, for c ourt-enforceability of interim 
measures of protection in suppor t of arbitration, for carrying out provisional and conservative 
measures, in case of exaggerated fees and the po ssibility of having a sent ence cancelled in the 
State of origin carried out,  
The Convention also takes into account the growing use of electro nic commerce as the 
agreement could be concluded or document ed by any electronic m eans of communication 
which render the information accessible. In intern ational arbitration concerns were raised as 
whether electronic communications complied with formal requirements for arbitration 
agreements.  
Conflicts arose on one hand between foreign c ourt judgments, presented for their recognition 
in violation of arbitration agreements by one  of the parties, and, on the other hand the 
arbitration agreement between itself them i nvoked by the defendant or a pending arbitral 
proceeding or even an arbitral award, which ar e not solved in international law an legal 
practice. The Convention has th e advantage firstly to give court chosen by the agreement 
exclusive jurisdiction to deal with the dispute and this exclusivity shou ld be respected by the 
other States ratifying the Conve ntion and the parties. Nevert heless, the Convention has the 
important advantage of giving certain flexibi lity for EU companies in a twofold system: 
Firstly, the court designated in the agreement has the possibility to consider it null and void. 
More importantly, it allows the defendant to se ize a court not chosen by the parties in the 
agreement but nevertheless it organizes in its ar ticles 5 and 6 a sound and clear procedure to 
deal with such a conflict of ju risdiction. It also pr ovides a clear rule on the possibility to 
obtain interim measures of pr otection in its article 7. Las tly, the Conventi on contains a 
simplified and uniform procedure for rec ognition and enforcement of decisions. 
In the absence of a global instrument on the r ecognition and enforcement of judicial decisions 
similar to the New York Convention referred to  above, arbitration is naturally perceived as 
providing advantages in terms of speediness and confidentiality. Nevertheless, arbitration is not a method of disputes resolution that would be in all circumstances  more effective than 
courts dispute settlements in terms of eff ectiveness (implementation of the decision).  
                                                
 
33 http://www.uncitral.org/u ncitral/fr/index.html  
 
EN 21   EN A global court settlement procedure would have  the first advantage to benefit for these 
companies that already have recourse to choice-of-court clauses34. Moreover, it will represent 
an incentive for other companies to use court settlements. Consequently, majority of the 
interested parties considers th at the existence of a global c onvention that would provide for 
the recognition and enforcement of choice of c ourt decisions, largely ratified, would be likely 
to bring them tangible profits in  relation to the current situati on, especially for companies that 
cannot currently afford internati onal arbitration, but not only.  
Companies that could not afford arbitration to day would certainly have more recourse to 
choice of court clauses as indeed demonstrated in an ABA survey35. It is estimated that the 
typical cost of arbitration is 20,000 Euro. For many small, and may be also for medium, 
business companies, it appears already as a si gnificant amount to afford although the average 
cost of international civil litigation could be  higher depending of the court system and the 
amount of the dispute.  
There are unfortunately no reliable data availa ble on the costs and length of dispute settlement 
under the different procedures. It appears that the cost s of judicial procee dings considerably 
vary from State to State. In particular, the cost  of court proceedings can vary to a great extent 
between third States, like the United States and European Member States and between the 
European countries themselves and that it will depend on the monetary value of the dispute. 
In addition, there is a need to take into consider ation the European rule of  "the looser pays all" 
or the American rule of "each side bears its own cost of litigation".  
The companies contacted by ABA replied that the mere existence of the Convention would 
have an effect on their willingness to go to cour t instead of using arbitration. The majority of 
stakeholders consulted declared that, substan tial problems are generate d by the absence of a 
world-wide system of jurisdictional rules and rules of recognition and enforcement. These are 
mainly: 
• Delays and costs caused in enforcing judgm ents of courts of EU Member States; 
• Uncertainty as to enforceability  of international contracts. 
International trade involves risk some of them derives from legal uncertainty. Legal 
uncertainty arises in part from at the same time:  uncertainty as to within which court a dispute 
may be heard; and, uncertainty as to whether th e judgement of the court will be upheld in the 
countries of both parties in dispute; but also uncer tainty as to whether th e arbitral award or the 
mediation agreement will be upheld in the countrie s of both parties. Legal uncertainly has also 
a cost for companies.  
These risks has been successfully reduced by the Brussels Regime for companies trading 
within the EU and EFTA countries, which prov e the advantages of having a comprehensive 
and modern system of court se ttlement for trade disputes. Bu t in spite of the alternative 
dispute settlement systems, the risk remain s high for EU companies trading with parties 
elsewhere in the world. 
                                                 
34 Almost 75% of the companies specified  courts in more than half of their international contracts 
according to an overview of choice of court practices of companies engaged in international business 
(Survey undertaken by the ICC in 2003 –see foot-note 3) 
35 see foot note 4 
 
EN 22   EN Therefore, the ratification of the Hague Convention by the Community would, should the 
Convention also be ratified by  other trading partners, reduce , like it happened in the EU 
framework, legal uncertainty by: ensuring that choice of court agreements in international 
trading contracts are respected; and ensuring th at the judgements of the courts would be 
recognised by the courts within the EU and ot her countries that are Parties to The Hague 
Convention.  
In this regard, it should be not ed that if the Conven tion enter into force without the European 
Community being Party to it, EU companies c ould not benefit from its advantages and EU 
companies may suffer drawbacks: 
- Only agreements designating a court of a Contracting Party coul d benefit from the 
exclusivity rule of its Article 4 a nd could be respected by other courts; 
- Only judgments given by courts of a Contra cting Party could be r ecognised and enforced 
according to its simplified procedure. 
This would be particularly detrimental to EU companies if several of our major trading 
partners were to be Parties to the Conven tion and not the EC. Indeed, in case where the 
agreement designates EU courts to settle any dispute, it will not be enforceable in any of the 
Contracting Parties according to the Convention. The defendant could easily raise any defence 
in another court than the chosen court in the EU  to refuse to comply with the agreement and 
any foreign court could refuse to uphold it. On the contrary, a judgement given on the basis of 
an agreement with a party domiciled in a Stat e applying the Convention,  and designating the 
court of that foreign State, could be enforced  easily against an EU defendant in any of the 
other State Parties and without any possibility to raise the de fences of article 5 of the 
Convention. 
Therefore a need exist for a coordination between the Member Hague Conference on 
ratification process of the Convention. The persp ectives for this ratific ation were discussed 
during the Council on General Affa irs and Policy of The Hague C onference that took place in 
April 2008. The EU's largest trading partner, the USA, indicated during that meeting that its 
intends to sign the Convention already this ye ar after a consultation process. Mexico has 
already acceded to the Conventi on and Canada has started the consultation process with the 
provinces in order to sign it. Russia told the Commission that it is exploring the possibility to 
ratify it. The signature of th e Convention on Choice-of-Court Agreements by the two major 
economies of the world (EU and USA) in 2008 w ould increase considerably the willingness 
of other important trading partners like China and Japan to proceed towards its signature and 
ratification swiftly. 
This policy option would therefore not contribu te to achieving any of the defined objectives 
although EU economic actors interviewed observed th at in the current s ituation international 
arbitration is used to resolve disputes in the absence of a worldwide sy stem of jurisdictional 
rules and rules on recognition and enforcement. It must be noted that the possibility of parties 
to a contract or to a dispute to choose internat ional arbitration to solve their dispute will not 
be affected by any of the policy options. Howeve r, as explained above the availability of 
arbitration does not give sufficient breadth of options to all parties i nvolved in international 
business transactions and, as poi nted out by some stakeholders, the only reason ar bitration is 
chosen today is the relatively high foreseeabilit y of the enforcement of arbitral awards as 
opposed to enforcement of judicial decisions. 
 
EN 23   EN 5.3. Policy option 2 — “active” status quo 
The conclusion of bilateral agreements with the USA, China and the Russian Federation 
would increase the legal certainty  of EU economic opera tors trading with these countries that 
their preference for the choice of  court will be respected and th at judgments made in relation 
to the disputes will be recognised and enforced  in these countries. Safeguarding the right of 
EU weaker economic operators in determining th e choice of court would be ensured for the 
matters falling within the scope of such an agre ement. Also, there would be slightly increased 
familiarity with EU law in American, Chines e and Russian courts because of a greater 
willingness to use courts to resolve disputes. In  the longer term, and as a consequence of the 
improved legal certainty, the value of trade be tween the EU and the three trading partners 
could increase. 
The assessment is illustrated in Table 5.1. Th e effects of the policy option on the policy 
objectives would be small even though the total va lue of trade with these three countries is 
very high. Legal certai nty would be achieved only to a very  limited degree, solely with the 
countries bound by the agreement. It would not pr otect against the possibility of one of the 
contracting partners seizing a c ourt in a third country that will  not respect the choice-of-court 
agreement in favour of a court in the Contrac ting Party. The same applies for all the other 
objectives: while the other Contracting Party to  the bilateral agreement would be bound to 
honour the solutions agreed, no other third countr y would be bound to do so if the dispute is 
brought before a court of that country. 
Depending on the willingness of the other Contracting Party to ar rive at a solution different 
from the Convention, some (or the same) problem s related to copyright and insurance might 
exist and additional inconsistencies with the Brussels I Regulation might arise. 
This policy option involving bilateral agreements  with selected tradi ng partners would be 
inconsistent with the Convention’s overall aim,  which is to promote a worldwide system of 
jurisdictional rules and rules on recognition a nd enforcement in civil and commercial matters. 
It would also depend on third countries’ willingne ss to negotiate such bilateral agreements in 
parallel to the exiting multilateral Convention,  in whose negotiation they invested time and 
resources in order to create a harmonised system with more th an just one contracting partner 
(see point 2.1.3. above). 
Such approach would also have administ rative and budgetary repercussions on the 
Commission who would have to negotiate these i ndividual agreements (such as allocations of 
staff, hosting part of nego tiations and missions to the respective third countries). 
Table 5.1 — Summary assessment of policy option 2 
Policy option 2: ‘active’ status quo 
Objective to be achieved/problem 
addressed 
 Anticipated 
impact 
(rated up to 
√√√√√ ) Explanation of rating and aspects of the 
policy option necessary to achieve impact 
To increase EU economic operators’ 
legal certainty that their preference for the choice of court to resolve √ Small effect: EU economic operators 
would be sure that their agreed preference of court would be respected vis-à-vis the 
 
EN 24   EN Policy option 2: ‘active’ status quo 
Objective to be achieved/problem 
addressed 
 Anticipated 
impact 
(rated up to 
√√√√√ ) Explanation of rating and aspects of the 
policy option necessary to achieve impact 
international commercial disputes will 
be respected.  other Contracting Party to the individual 
bilateral agreement, but not in any other country.  
To increase the pred ictability of the 
choice of court to resolve international commercial disputes involving EU economic operators. √ Small effect: EU economic operators 
would be sure that the judgment made by the chosen court would be respected on the territory of the other Contracting Party, but 
not in any other country.  
To safeguard EU economic operators’ 
rights in determining the choice of court where they ar e the weaker party. √ Small effect: the stronger partner (based in 
the other Contracting Party) would be limited in its attempts to seize a court other than that agreed in the contract with the weaker party. This limitation would, however, exist only in respect of the courts of the respective Contracting Parties.  
To promote the adoption of legal 
rights protected under  EU legislation 
in courts resolving international commercial disputes involving EU economic operators outside the EU. √ Small effect: the policy option would lead 
indirectly to increased familiarity with EU law in the other Contra cting Parties’ courts 
because of a greater willingness to use courts to resolve disputes. This would not extend to any other country.  
Potential economic benefits to the EU 
Reduced transaction costs associated 
with legal uncertainty The reduction would be proportionate to: the contribution 
of choice-of-court issues to overall legal uncertainty; and 
the additional number of choice-of-court agreements entered into between companies from the EU and the other Contracting Party; potential positive impact 
expected. 
Reduce time and costs of resolving disputes The reduction would be proportio nate to the number of 
disputes that would be resolv ed in court and the relative 
costs of courts versus other means of resolving disputes; 
potential positive impact expected. 
Increases in international trade As a consequence of increased legal certainty, an increase 
in EU trade with the other Contracting Parties would be possible. 
Perceptions of advantages and Advantages Disadvantages 
 
EN 25   EN Policy option 2: ‘active’ status quo 
Objective to be achieved/problem 
addressed 
 Anticipated 
impact 
(rated up to 
√√√√√ ) Explanation of rating and aspects of the 
policy option necessary to achieve impact 
disadvantages 
Existing EU economic actors 
(including their representatives) No direct evidence of 
views, but lik ely to be 
perceived as beneficial.  
International lawyers 
 No direct evidence of 
views, but lik ely to be 
perceived as beneficial.  
Preconditions and essential 
accompanying measures A precondition would be the willingness of the other 
Contracting Party to negotiate such an individual bilateral 
agreement. 
Complementarity with existing (and forthcoming) acquis Complementarity can be achieved in bilateral 
negotiations. 
Economic and social impacts in EU and third countries  Problems with intellectual property rights (unless 
excluded from the scope of the bilateral agreement) because they could be tried in courts where such rights are less protected (although the ri ghtsholder would have had 
to agree). Especially China offers a low level of protection of such rights. 
Problem with insurance (unl ess excluded from the scope) 
because they could be tried in  courts without a close link 
with the action (this would be  unfavourable to the weaker 
party). 
The existence of a bilateral agreement with a certain third 
country might raise the EU ope rator’s willingness to enter 
into choice-of-court agreements with an operator from that country and vice versa. 
It would guarantee the possibility of recognition and 
enforcement of judgments give n by the chosen court in a 
third country, Contracting Party to the bilateral 
agreement, in the EU and vice versa. 
Implementation costs Costs would be incurred by the Commission in the 
process of negotiation and conclu sion of bilateral treaties. 
 
EN 26   EN 5.4. Policy option 3 — provision  of ‘public insurance’ 
This policy option could give advantage to EU  companies involved in disputes through 
offsetting the costs of legal insurance. Some positive effects could be expected as far as increased international commerce is concerne d, as companies would be more willing to 
establish business relations with international pa rtners knowing that, in th e event of a dispute, 
their costs of proceedings might be covered by the insurance. 
The creation of such a system at EU level wo uld be problematic, sinc e significant financial 
resources would be required at EU and/or Member State level to implement this policy 
option. 
The policy option would in no way increase the le gal certainty of EU economic operators that 
their preference for the choice of court to resolve international commercial disputes will be respected, nor increase the predictability of the choice of court to resolve international 
commercial disputes. 
An indirect consequence of implementing such  an option would be an overall increase in 
court cases. As indicated in a report published by the British Copyright Council
36, such 
insurances can unreasonably raise the expectatio ns of those insured and encourage litigation 
where this is unnecessary and where ne gotiated settlement would be better. 
Table 5.2 — Summary assessment of policy option 3 
Policy option 3 — provision  of ‘public insurance’ 
Objective to be achieved/problem 
addressed 
 Anticipated 
impact 
(rated up to 
√√√√√ ) Explanation of rating and aspects of the 
policy option necessary to achieve impact 
To increase EU economic operators’ 
legal certainty that their preference for the choice of court to resolve international commercial disputes will be respected.  0 No effect: the insurance would cover the 
costs of disputes, it would help the companies, but not reduce the ‘economic’ legal uncertainty.  
To increase the pred ictability of the 
choice of court to resolve international commercial disputes involving EU economic operators. 0 No effect: the insurance would cover the 
costs of disputes, it would help the companies, but not reduce the ‘economic’ legal uncertainty.  
To safeguard EU economic operators’ 
rights in determining the choice of 
court where they ar e the weaker party. √ Small effect: it would help the weaker 
party to accept the in clusion of choice-of-
court agreements in contracts, as their 
potential costs woul d be offset by the 
insurance.  
                                                 
36 The British Copyright Council, http://www.britishcopyright.org/  
 
EN 27   EN Policy option 3 — provision  of ‘public insurance’ 
Objective to be achieved/problem 
addressed 
 Anticipated 
impact 
(rated up to 
√√√√√ ) Explanation of rating and aspects of the 
policy option necessary to achieve impact 
To promote the adoption of legal 
rights protected under  EU legislation 
in courts resolving international commercial disputes involving EU economic operators outside the EU. 0 No direct effect: it is possible that more 
cases might be heard in third-country courts, but otherwise the status quo would 
be maintained.  
Potential economic benefits to the EU 
Reduced transaction costs associated 
with legal uncertainty Benefits would accrue to th e operators receiving the 
support. 
Reduce time and costs of resolving disputes No impact on the actual (economic) time and costs, 
indeed these could increase as the insurance might lead to cases going to court that would not otherwise do so. However, the companies involved would benefit financially. 
Increases in international trade Some positive effects expected. 
Perceptions of advantages and 
disadvantages Advantages Disadvantages 
Existing EU economic actors 
(including their representatives) No direct evidence of 
views, but lik ely to be 
perceived as beneficial.  
International lawyers 
 No direct evidence of 
views, but lik ely to be 
perceived as beneficial.  
Preconditions and essential 
accompanying measures Significant financial resource s would be required at EU 
and/or MS level; however, such a policy option could be limited to particular sectors or types of company that 
experience the greatest legal uncertainties when trading internationally. 
Complementarity with existing (and forthcoming) acquis Potential conflicts over State aids. 
Economic and social impacts in EU 
and third countries  In effect the EU or the Memb er States would be paying 
the costs of the legal uncerta inty to the economy, through 
subsidies for insurance rather than reducing the costs to the economy. The support could give advantage to EU 
 
EN 28   EN Policy option 3 — provision  of ‘public insurance’ 
Objective to be achieved/problem 
addressed 
 Anticipated 
impact 
(rated up to 
√√√√√ ) Explanation of rating and aspects of the 
policy option necessary to achieve impact 
companies in disputes. 
Implementation costs There would be significant implementation costs involved 
in implementing this policy option. 
 
5.5. Policy option 4 — provision of information to businesses on current risks 
stemming from uncertainty in the choice of courts 
This policy option is expected to increase the awareness of legal uncer tainty among economic 
operators, which might change their behaviour and consequently they may take appropriate 
action to protect their rights. This is expected  to be particularly beneficial to smaller 
companies. 
The effects of the policy option on  international trade are difficult to predict: the option might 
have a possible small positive effect, but it could also potentially reduce international trade through pointing out the ‘pitfal ls’ of legal uncertainty. 
Table 5.3 — Summary assessment of policy option 4 
Policy option 4 — provision of information to  businesses on current risks stemming from 
uncertainty in the choice of courts 
Objective to be achieved/problem 
addressed 
 Anticipated 
impact 
(rated up to 
√√√√√ ) Explanation of rating and aspects of the 
policy option necessary to achieve impact 
To increase EU economic operators’ 
legal certainty that their preference for the choice of court to resolve international commercial disputes will be respected.  √ Small effect: it would increase awareness 
of legal uncertainty.  
To increase the pred ictability of the 
choice of court to resolve international commercial disputes involving EU economic operators. 0 No effect: status quo.  
To safeguard EU economic operators’ 
rights in determining the choice of court where they ar e the weaker party. √ Small effect: operators may take steps to 
protect their rights.  
 
EN 29   EN Policy option 4 — provision of information to  businesses on current risks stemming from 
uncertainty in the choice of courts 
Objective to be achieved/problem 
addressed 
 Anticipated 
impact 
(rated up to 
√√√√√ ) Explanation of rating and aspects of the 
policy option necessary to achieve impact 
To promote the adoption of legal 
rights protected under  EU legislation 
in courts resolving international commercial disputes involving EU economic operators outside the EU. 0 No effect: status quo. 
Potential economic benefits to the EU 
Reduced transaction costs associated 
with legal uncertainty Possible small effect through EU operators being better 
aware of the uncertainties, a nd taking appropriate action. 
Reduce time and costs of resolving 
disputes Possible small effect through EU operators being better 
aware of the different dispute-resolution options available and choosing the appropriate one for their dispute. 
Increases in international trade Possible small positive effect, but it could also potentially 
backfire and reduce international trade through pointing out the ‘pitfalls’ of legal uncertainty. 
Perceptions of advantages and disadvantages Advantages Disadvantages 
Existing EU economic actors 
(including their representatives) Some EU operators are not 
fully aware of the extent and potential consequences of legal uncertainty.  
International lawyers 
  Currently lawyers are an 
important source of this information; this policy option might lead to a decrease in demand for their services. 
Preconditions and essential accompanying measures Would require commitment and financial resources, most 
likely at Member State level. 
Complementarity with existing (and forthcoming) acquis No impact. 
Economic and social impacts in EU 
and third countries  Provision of general informati on might lead to a decrease 
in demand for lawyers’ services. 
 
EN 30   EN Policy option 4 — provision of information to  businesses on current risks stemming from 
uncertainty in the choice of courts 
Objective to be achieved/problem 
addressed 
 Anticipated 
impact 
(rated up to 
√√√√√ ) Explanation of rating and aspects of the 
policy option necessary to achieve impact 
The effect on third countries might result in a decrease in 
trade due to EU companies’ higher awareness and unwillingness to take risks in respect of those countries. 
Implementation costs Only minor implementation costs would accrue at EU 
level. Costs would occur at national, regional and local 
levels commensurate with the financial resources committed and activities implemented. 
 
5.6. Policy option 5 — conclusion of the Convention by the Community without 
making any declarations under its Article 21 
The conclusion of the Convention by the Community without a ny declaration under 
Article 21 would mean that in two areas iden tified as problematic (insurance and copyright 
and related rights) the status quo would be affected to the pote ntial detriment of the “weaker” 
party in the contractual relations hip, even if the weaker party w ould have had to agree to the 
choice of a court in a third country. 
The conclusion of the Convention by the Commun ity would increase EU economic operators’ 
legal certainty that their prefer ence for the choice of court to  resolve international commercial 
disputes would be respected. This increased legal certainty would affect all the trading sectors falling within the scope of the Convention as no  specific matters would be excluded from the 
Convention. 
This policy option would increase the predicta bility of the choice of court to resolve 
international commercial disputes involving EU  economic operators, because the judgments 
of the courts would be eligible for recognition and enforcement in all the countries which are 
Contracting Parties to the Convention. 
The policy option would help safeguard the righ ts of the smaller and weaker EU economic 
operators in determining the choice of court.  The stronger partner would be limited in its 
attempts to seize a court other than the one ag reed in the contract with the weaker party. 
The policy option could lead indirectly to increa sed familiarity with EU law in third-country 
courts, because of a greater willingness to use t hose courts to resolve disputes. Consequently, 
legal rights protected un der EU legislation could be given in creased protection also in courts 
resolving international commerci al disputes involving EU econo mic operators outside the EU. 
 
EN 31   EN However, the benefits to EU economic operato rs from this policy option are based on the 
assumption that at least the EU’s main tradi ng partners (such as the USA, China and the 
Russian Federation) also ratify the Convention37. 
Some negative consequences co uld arise from this policy op tion. If not excluded from the 
Convention, some problems might arise in connection with copyright and related rights 
because the courts of third countries (agree d upon by the parties to a contract) would be 
allowed to decide issues concerning validit y of copyright linked with the EU and such 
judgments would be eligible for recognition with in the EU. Such results may have an impact 
on actors unrelated to the dispute or even the public at large, when the type and level of 
protection differs in detail from what EU legislators deem proper. 
Furthermore, problems can arise in relation to in surance matters. Some discrepancies with the 
Brussels I Regulation might arise, since the Re gulation allows the insured usually to sue the 
insurer at his own place of domicile irrespectiv e of any other jurisdic tion available under the 
law or under a choice-of-court agreement. It also  limits party autonomy as regards the choice 
of court (which is not the case under the Conve ntion). The application of the Convention in 
this field would therefore contradict the policy of the Br ussels I Regulation. 
Companies and law firms perceive the Conventi on as a beneficial instrument for increasing 
legal certainty for economic opera tors engaging in international trade. Another impact of the 
conclusion of the Convention would be in creased willingness by companies to opt for 
litigation instead of arbitration in international contracts. 
In this regard, the ABA survey38 demonstrated that, when asked if a Convention on choice-of-
court agreement would make economic operators more willing to opt for litigation instead of arbitration in contracts, 70% of respondents answered positivel y. Almost all the respondents, 
i.e. 98%, stated that such a Convention w ould be useful for their economic practice. 
The majority of the companies contacted wh en the Impact Assessment was being drawn up 
stated that the Convention would be useful for setti ng up a worldwide system of jurisdictional 
rules and rules on recognition and enforcement of  judgments in civil and commercial matters. 
Also, the companies affirmed that the existe nce of the Convention would impact on their 
willingness to go to court instead of using ar bitration. According to the companies, the 
Convention would reduce the risks of companie s going through the entire complicated court 
process but not seeing the final judgment enforced. 
One stakeholder pointed out that the absence of a worldwide system of jurisdictional rules and 
rules on recognition and enforcement in civil a nd commercial matters generates uncertainty 
and delays, thereby raising the co st of investment and trade. A nother stakeholder stated that 
ratification of such a Conven tion would probably have only a marginal impact on companies’ 
willingness to go to court instead of using arbi tration. The most common problems associated 
with courts would not be solved through the Convention, namely the length of court 
                                                
 
37 All these countries were very active in the negotiations on the Convention and the final result achieved 
reflects also their preoccupations. Consequently, it is expected that these countries will ratify the 
Convention. Indeed, acco rding to informal work contacts with the US authorities, they are currently 
preparing to sign the Convention and could be ready in the second half of 2008. The signing of the Convention by the Community and the USA would be a strong impetus for other countries to become 
Parties to the Convention. 
38 See footnote 4. 
 
EN 32   EN procedures, high cost and impartiality issues. Therefore, it was felt that the relevance of 
arbitration in international disput es would probably not be affected. 
On the other hand, two stakeholders stated that the Convention w ould possibly impact on 
companies’ willingness to go to court instead  of using arbitration, since the better 
enforceability of arbitral awards  was considered a major advantage of arbitration compared to 
court proceedings. 
One stakeholder expressed a contrasting opinio n about the effectiveness of the Convention, 
saying that although the Conven tion would introduce a clear le gal framework, arbitration 
would still normally prevail over proceedings in courts because it would still take less time, 
which is always crucial in doing business. 
Table 5.4 — Summary assessment of policy option 5 
Policy option 5 — conclusion of the Conventi on without making any declarations under its 
Article 21  
Objective to be achieved/problem 
addressed 
 Anticipated 
impact 
(rated up to 
√√√√√ ) Explanation of rating and aspects of the 
policy option necessary to achieve impact 
To increase EU economic operators’ 
legal certainty that their preference for the choice of court to resolve international commercial disputes will be respected.  √√√ Significant effect: EU economic operators 
would be sure that their agreed preference of court would be respected in other Contracting Parties to  the Convention. The 
extent of legal certa inty would depend on 
the number of Contracting Parties.  
To increase the pred ictability of the 
choice of court to resolve international commercial disputes involving EU economic operators. √√√ Significant effect: EU economic operators 
would be sure that the judgment made by the chosen court would be respected in all the other Contracting Pa rties. The extent of 
legal certainty would depend on the number of Contracting Parties.  
To safeguard EU economic operators’ 
rights in determining the choice of court where they ar e the weaker party. √√ – Some effect: the stronger partner would 
be limited in its attempts to seize a court other than that agreed in the contract with the weaker party. However, there is a potential for 
difficulties in the area of insurance 
matters and copyright and related rights.  
To promote the adoption of legal 
rights protected under  EU legislation 
in courts resolving international commercial disputes involving EU economic operators outside the EU. √√ Some effect: the policy option would lead 
indirectly to increased familiarity with EU law in third-country courts because of a greater willingness to use courts to resolve disputes.  
 
EN 33   EN Policy option 5 — conclusion of the Conventi on without making any declarations under its 
Article 21  
Objective to be achieved/problem 
addressed 
 Anticipated 
impact 
(rated up to 
√√√√√ ) Explanation of rating and aspects of the 
policy option necessary to achieve impact 
Potential economic benefits to the EU 
Reduced transaction costs associated 
with legal uncertainty The reduction would be proportionate to: the contribution 
of choice-of-court issues to overall legal uncertainty; the countries ratifying the Conve ntion; and the additional 
number of choice-of-court agreements entered into. 
Reduce time and costs of resolving 
disputes The reduction would be proportio nate to: the number of 
disputes that would be resolv ed in court; and the relative 
costs of courts versus other means of resolving disputes. 
Increases in international trade The decrease in uncertainty might work as an impetus for 
increased interest in concl uding international contracts 
and thus increase the amount of trade. 
Perceptions of advantages and disadvantages Advantages Disadvantages 
Existing EU economic actors 
(including their representatives) 98% of the ABA survey 
respondents stated that such a Convention would be useful for their economic practice. 
The majority of the 
companies contacted stated that the Convention would be useful in order to set up a worldwide system of jurisdictional rules and rules on recognition and enforcement of judgments in civil and commercial matters. The application of the 
Convention to copyright and related rights may present some risks for individual authors and/or performers, who are generally the weaker party to a contract. The latter may find themselves having to accept as valid a choice-of-court clause which is imposed on them by and more favourable to a co-contractor in a stronger position. 
International lawyers 
  The Convention may not be 
ratified by many countries, because of significant differences in legal systems and historic and political animosities between some countries. 
 
EN 34   EN Policy option 5 — conclusion of the Conventi on without making any declarations under its 
Article 21  
Objective to be achieved/problem 
addressed 
 Anticipated 
impact 
(rated up to 
√√√√√ ) Explanation of rating and aspects of the 
policy option necessary to achieve impact 
Preconditions and essential 
accompanying measures The benefits to EU economic operators that emerge from 
this policy option are based on the assumption that the 
main commercial partners also ratify the Convention. 
Complementarity with existing (and 
forthcoming) acquis The policy option would affect the Brussels I 
Regulation39, in particular its Article 23 and the rules on 
lis pendens40 (Chapter II, Section 9)  when one of the 
parties to the dispute has re sidence in the EU and the 
other party has residence in  another Contracting Party . 
Economic and social impacts in EU 
and third countries  The potential for increased international trade with third 
countries is high, but: 
– problems with certain in tellectual property rights 
may arise, because they could be tried in courts where these rights are less protected (although the rightsholder would have had to agree to the jurisdiction of such courts); 
– problem with insurance: the EU weaker party is 
not protected enough. 
Litigants would have an increased guarantee that their 
choice-of-court agreements in  favour of the court in a 
third country (Contracting Part y to the Convention) would 
be upheld by the courts within the EU (and vice versa), and that judgments given by the chosen court in third 
countries would be eligible for recognition and enforcement within the EU (and vice versa). 
Implementation costs The costs of conclusion of th e Convention are very low. 
The costs at Community le vel would involve only the 
time inputs of policy makers for undertaking the conclusion. The Convention would be implemented directly by the courts. 
 
                                                 
39 For further analysis see Annex 4 of the study referenced in footnote 1. 
40 Lis pendens  is Latin for “suit pending”. In the Brussels I Regulation it refers to situations where the fact 
that one court was seized of a dispute prohibits another court seized of the same dispute from 
proceeding as long as the jurisdiction of th e court first seized has been established. 
 
EN 35   EN 5.7. Policy option 6a — conclusion of the Co nvention with a declaration under its 
Article 21 excluding copyright and relat ed rights, where the validity of these 
rights is linked to a Member State 
Taking into consideration the sens itivity of the copyright issue and its implications for society 
as a whole (see point 2.2.2.3. above), the exclusi on of copyright and related rights from the 
scope of the Convention would ha ve the following advantages: 
• the Convention would not apply to the choice -of-court agreements that could weaken 
protection with respect to copyr ight and related rights and woul d maintain the standards set 
by the EU on these matters; 
• EU holders of copyright and related rights coul d not be forced into choice-of-court 
agreements that would undermine the protection of their rights accorded to them within the 
EU. 
The consultations with different stakeholders  on the Commission’s 2004 Consultation Paper 
on the draft Convention showed diverging opin ions on exclusion of copyright and related 
rights from the scope of the Convention. 
Member States that contributed to the consul tation (France, Estonia, Latvia and the Czech 
Republic) answered that copyright should be included in the scope of the Convention. Two 
stakeholders stated that copyrig ht should be treated in the same  way as the other intellectual 
property rights under the Convention. For them there was no reason to  exclude copyright 
from the Convention and deprive author s of benefiting from the Convention. 
On the other hand, three stakeholders stated that  copyright and related rights should be left 
outside the scope of the Convention. The app lication of the Convention to copyright and 
related rights may present some risks for i ndividual authors and/or performers, who are 
generally the weaker party to a contract. The latter may find themselves having to accept as 
valid a choice-of-court clause which is imposed on them by a co-contracto r in a stronger 
position. It is therefore necessary  to protect the authors (and performers) against choice-of-
court agreements which may oblige them to plead far from their country, with all the possible 
consequences in terms of complexity and costs. 
It has to be taken into account  that there are areas in which the Community has set standards 
for the protection of certain parties which, with in the EU, may not be infringed by choice of 
court clauses. The protection of these parties could nevertheless be undermined in case of a 
choice of court clause in favor of  a court in a third State. Prob lems could arise for the specific 
area in which the EU and its Member States might  wish to exercise exclusive control such as 
intellectual property rights and, specifically, copyrights. The mo st important factor, as shown 
by an EC survey, is that the frequency of inte llectual property rights infringements in third 
countries is growing. These infringements affect  more and more often EU operators trading 
with these countries.  
The exclusion suggested under this policy option will therefore address most of the concerns 
raised by stakeholders. 
Table 5.5 — Summary assessment of policy option 6a 
 
EN 36   EN Policy option 6a — conclusion of the Conventi on with a declaration under its Article 21 
excluding copyright and related rights, where th e validity of these rights is linked to a 
Member State 
Objective to be achieved/problem 
addressed 
 Anticipated 
impact 
(rated up to 
√√√√√ ) Explanation of rating and aspects of the 
policy option necessary to achieve impact 
To increase EU economic operators’ 
legal certainty that their preference for the choice of court to resolve international commercial disputes will be respected.  √√
√ Important effect: EU economic operators 
would be sure that th eir agreed choice of 
court would be respected in other Contracting Parties to the Convention in the areas covered by the Convention. The extent of legal certa inty would depend on 
the number of Contracting Parties.  
To increase the pred ictability of the 
choice of court to resolve international commercial disputes involving EU 
economic operators. √√
√ Important effect: EU economic operators 
would be sure that the judgment made by the chosen court would be respected in all 
the Contracting Parties. Choice-of-court 
agreements in the field of copyright and related rights would not benefit from the rules of the Convention.  
To safeguard EU economic operators’ 
rights in determining the choice of court where they ar e the weaker party. √√
√ Important effect:  the stronger partner 
would be limited in its attempts to seize a court other than that ag reed in the contract 
with the weaker party. Community policies in the area of copyright and related rights would be safeguarded.  
To promote the adoption of legal 
rights protected under  EU legislation 
in courts resolving international commercial disputes involving EU economic operators outside the EU. √
√ Some effect: the policy option would lead 
indirectly to increased familiarity with EU law in third-country courts because of a greater willingness to use courts to resolve disputes.  
Potential economic benefits to the EU 
Reduced transaction costs associated 
with legal uncertainty The reduction would be proportionate to: the contribution 
of choice-of-court issues to overall legal uncertainty; the 
additional number of choice-of -court agreements entered 
into; and the countries that  ratify the Convention. 
Arguably the reduction would be less than in policy option 5. However, without this exclusion some costs could arise for copyright holders. 
Reduce time and costs of resolving disputes The reduction would be proportio nate to: the number of 
disputes that would be resolv ed in court; and the relative 
 
EN 37   EN Policy option 6a — conclusion of the Conventi on with a declaration under its Article 21 
excluding copyright and related rights, where th e validity of these rights is linked to a 
Member State 
Objective to be achieved/problem 
addressed 
 Anticipated 
impact 
(rated up to 
√√√√√ ) Explanation of rating and aspects of the 
policy option necessary to achieve impact 
costs of courts versus other means of resolving disputes. 
Arguably the benefits of reduced time and costs of resolving disputes would be less than in policy option 5. 
However, without this exclus ion some costs could arise 
for copyright holders. 
Increases in international trade The decrease in uncertainty might work as an impetus for 
increased interest in concl uding international contracts 
and thus increase the amount of trade, arguably with the exception of the area excluded by declaration. 
Perceptions of advantages and disadvantages Advantages Disadvantages 
Existing EU economic actors 
(including their representatives) Two organisations were of 
the opinion that the application of the Convention to copyright and related rights may present some risks for individual authors and/or performers, who are generally the weaker party to a contract. All Member States that 
responded to this particular question answered that copyright should be within the scope of the Convention. Similarly, some stakeholders declared that copyright and related rights should be treated in the same way as other intellectual property rights under the Convention. 
International lawyers 
 One law firm stated that 
copyright and related rights should also be outside the scope of the Convention.  
Preconditions and essential 
accompanying measures The benefits to EU economic operators that emerge from 
this policy option are based on the assumption that the 
main commercial partners also ratify the Convention. 
Complementarity with existing (and 
forthcoming) acquis The policy option would affect  the Brussels I Regulation, 
in particular its Arti cle 23 and the rules on lis pendens 
(Chapter II, Section 9)  when one of the parties to the 
dispute has residence in the EU and the other party has 
residence in another Contracting Party. 
 
EN 38   EN Policy option 6a — conclusion of the Conventi on with a declaration under its Article 21 
excluding copyright and related rights, where th e validity of these rights is linked to a 
Member State 
Objective to be achieved/problem 
addressed 
 Anticipated 
impact 
(rated up to 
√√√√√ ) Explanation of rating and aspects of the 
policy option necessary to achieve impact 
Economic and social impacts in EU 
and third countries  The potential for increased international trade with third 
countries is high, but: 
– problem with insurance, the EU weaker party is 
not protected enough. 
Litigants would have an increased guarantee that their 
choice-of-court agreements in  favour of the court in a 
third country (Contracting Part y to the Convention) would 
be upheld by the courts within the EU (and vice versa), and that judgments given by the chosen court in third 
countries would be eligible for recognition and enforcement within the EU (and vice versa). 
There would be no negative so cial impacts for the weaker 
parties in the area of copyr ight and related rights. 
Implementation costs Very low (same as policy option 5). 
 
5.8. Policy option 6b — conclusion of the Convention by the Community with a 
declaration under its Article 21 excl uding insurance matters, where the 
policyholder is domiciled in the EU and the risk or insured event, item or 
property is related ex clusively to the EU 
This policy option would mean that EU policyhol ders could not be ‘pressed’ into litigating 
insurance benefits at courts which might re duce the protection of their rights, and the 
economic interests of the areas in which they ar e located, to a level belo w what is applicable 
within the EU. 
The Convention on Choice of Court Agreements contains exclusion from its scope which 
takes into account the many conc erns raised during the consu ltations. Very importantly for 
EU interests and with regard to protective rules for such parties existing in Community law, it 
applies only to business to business relations and not to business to consumer and excludes 
employment contracts that we re important points for EU States and some stakeholders41. 
Insurance contracts are a matter not excluded from the scope of the Convention but EU 
                                                 
41 Article 2 Exclusions from scope 
1. This Convention shall not apply to exclusive choice of court agreements - 
a) to which a natural person acting primarily for personal, family or household purposes (a consumer) is a party;  
2. Relating to contracts of employme nt, including collective agreements. 
 
EN 39   EN legislation contains prot ective rules of juri sdiction. This exclusion is important to avoid that 
the choice of a foreign court could lead to th e deprivation of the protection provided to these 
weaker parties by Community law. 
In relation to insurance, it has been decided in the EU that the weaker party should be 
protected by rules of jurisdiction more favorable  to his interests than the general rules of 
Council Regulation (EC) No 44/2001 of 22  December 2000 on jurisdiction and the 
recognition and enforcement of judgments in  civil and commercial matters (so-called 
"Brussels I")42. In particular, for this reason, the aut onomy of the parties to an insurance, 
consumer or employment contract to determ ine the courts having jurisdiction has been 
limited. If there would be no excl usion from the scope of the Convention for insurance sector, 
there could be a conflict between the C onvention and the Community legislation on 
jurisdiction in matters of insurance. Indeed, the Conventio n foreseen in its Article 26 (6) 
related to the relationship with other internati onal instruments, that it shall not affect the 
application of the EC rules only  where none of the parties is re sident in a Contracting State 
that is not a Member State of the European Co mmunity. It means that when one of the parties 
to the dispute has its residence in the EU a nd the other party has its residence in another 
Contracting Party, the Convention would appl y and affect negatively the EC Regulation 
"Brussels I". This regulation ind eed also applies in this case and contains protective rule for 
the policy holder, the insured or the beneficiary, ev en if the insurer is not domiciled in the EU, 
but has a branch, agency or other establishment in one of the Member States43. It should be 
noted however that the exclusion is limited to ri sk or insured event, item or property related 
exclusively to the EU 
This exclusion may have also negative impli cations. For instance, a judgment given by the 
court at the domicile of the policyholder would not benefit fr om recognition and enforcement 
abroad under the Convention. 
However, these are minor disadvantages/downsides compared to the possibility of excluding 
insurance matters either comp letely from the scope of th e Convention or excluding them 
whenever the policyholder and the risk are located in the EU. 
                                                 
42 See Council Regulation (CE) No 44/2001 of 22.12.2000, OJ L 12, 16.1.2001, p. 1, and, in particular 
Chapter I, section 3. 
43 Article 12: 
1. Without prejudice to Article 11(3), an insurer may bring proceedings only in the cour ts of the Member State in 
which the defendant is domiciled, irrespective of whether he is the policyholder, the insured or a 
beneficiary. 
2. The provisions of this Section shall not affect the ri ght to bring a counter-claim in the court in which, in 
accordance with this S ection, the original claim is pending. 
Article 13 The provisions of this Section may be departed from only by an agreement: 
1. which is entered into after the dispute has arisen, or 
2. which allows the policyhold er, the insured or a beneficiary to bring proceedings in courts other than those 
indicated in this Section, or 
3. which is concluded between a policyholder and an insurer, both of whom are at the time of conclusion of the 
contract domiciled or habitually resident in the same Member State, and which has the effect of 
conferring jurisdiction on the cour ts of that State even if the ha rmful event were to occur abroad, 
provided that such an agreement is not contrary to the law of that State, or 
4. which is concluded with a policyholder who is not domiciled in a Member State, except in so far as the 
insurance is compulsory or relates to immovable property in a Member State, or 
5. which relates to a contract of insurance in so far as it covers one or more of the risks set out in Article 14.  
 
EN 40   EN The impacts of this policy option depend on the scope of the EU insurance sector. A recent 
EC report on the business insura nce sector showed that the size of the global non-life 
insurance market was over 1.1 trillion euro in  2005. The European non-life insurance market, 
collectively, is comparable but smaller in si ze to that of the USA, the other major world 
market. The number of non-life insurers in Eur ope has declined steadily  in recent years. 
However, there are still close to 3 000 non-life companies operating within the EU insurance 
market. 
Table 5.6 — Summary assessment of policy option 6b 
Policy option 6b — conclusion of the Conven tion with a declaration under its Article 21 
excluding insurance matters,  where the policyholder is domicile d in the EU and the risk or 
insured event, item or property is related exclusively to the EU  
Objective to be achieved/problem 
addressed 
 Anticipated 
impact 
(rated up to 
√√√√√ ) Explanation of rating and aspects of the 
policy option necessary to achieve impact 
To increase EU economic operators’ 
legal certainty that their preference for the choice of court to resolve international commercial disputes will be respected.  √√
√ Important effect: EU economic operators 
would be sure that th eir agreed choice of 
court would be respected in other Contracting Parties to  the Convention. The 
extent of legal certa inty would depend on 
the number of Contracting Parties.  
To increase the pred ictability of the 
choice of court to resolve international commercial disputes involving EU economic operators. √√
√ Important effect: EU economic operators 
would be sure that the judgment made by the chosen court would be respected in all the Contracting Parties. Companies acting in the field of insurance would not benefit from the Convention.  
To safeguard EU economic operators’ 
rights in determining the choice of court where they ar e the weaker party. √√
√ Important effect: the stronger partner 
would be limited in its attempts to seize a court other than that ag reed in the contract 
with the weaker party. Community policies in the area of protection of weaker parties in insurance contracts would be safeguarded.  
To promote the adoption of legal 
rights protected under  EU legislation 
in courts resolving international commercial disputes involving EU economic operators outside the EU. √
√ Some effect: the policy option would lead 
indirectly to increased familiarity with EU law in third-country courts because of a greater willingness to use courts to resolve disputes.  
Potential economic benefits to the EU 
Reduced transaction costs associated 
with legal uncertainty The reduction would be proportionate to: the contribution 
of choice-of-court issues to overall legal uncertainty; the 
 
EN 41   EN Policy option 6b — conclusion of the Conven tion with a declaration under its Article 21 
excluding insurance matters,  where the policyholder is domicile d in the EU and the risk or 
insured event, item or property is related exclusively to the EU  
Objective to be achieved/problem 
addressed 
 Anticipated 
impact 
(rated up to 
√√√√√ ) Explanation of rating and aspects of the 
policy option necessary to achieve impact 
additional number of choice-of -court agreements entered 
into; and the countries that  ratify the Convention. 
Arguably the reduction would be less than in policy option 5. However, without this exclusion some costs could arise for those ente ring insurance contracts. 
Reduce time and costs of resolving 
disputes The reduction is proportionate to : the number of disputes 
that would be resolved in cour t; the relative costs of courts 
versus other means of resolv ing disputes. Arguably the 
reduction in time and costs of resolving disputes would be 
less than in policy option 5.  However, without this 
exclusion some costs could arise for those entering 
insurance contracts. 
Increases in international trade The decrease in uncertainty might work as an impetus for 
increased interest in concl uding international contracts 
and thus increase the amount of trade, arguably with the exception of the area excluded by declaration. 
Perceptions of advantages and disadvantages Advantages Disadvantages 
Existing EU economic actors 
(including their representatives)  Insurance companies might 
be disappointed by exclusion of insurance matters from the scope of the Convention. The representatives of the sector expressed a positive opinion towards inclusion of the sector within the scope of the Convention. 
International lawyers 
 No direct evidence of 
views.  
Preconditions and essential 
accompanying measures The benefits to EU economic operators that emerge from 
this policy option are based on the assumption that the 
main commercial partners also ratify the Convention. 
Complementarity with existing (and The policy option would affect  the Brussels I Regulation, 
 
EN 42   EN Policy option 6b — conclusion of the Conven tion with a declaration under its Article 21 
excluding insurance matters,  where the policyholder is domicile d in the EU and the risk or 
insured event, item or property is related exclusively to the EU  
Objective to be achieved/problem 
addressed 
 Anticipated 
impact 
(rated up to 
√√√√√ ) Explanation of rating and aspects of the 
policy option necessary to achieve impact 
forthcoming) acquis in particular its Arti cle 23 and the rules on lis pendens 
(Chapter II, Section 9)  when one of the parties to the 
dispute has residence in the EU and the other party has 
residence in anothe r Contracting Party . If the insurance 
sector is not excluded from the scope of the Convention, there could be a conflict in policy aims with Chapter II 
Section 3 of the Brussels I Regulation. 
Economic and social impacts in EU and third countries  The potential for increased international trade with third 
countries is high, but: 
– problems with certain in tellectual property rights 
may arise, because they could be tried in courts 
where these rights are less protected (although the rightsholder would have had to agree to the jurisdiction of such courts). 
Litigants would have an increased guarantee that their 
choice-of-court agreements in  favour of the court in a 
third country (Contracting Part y to the Convention) would 
be upheld by the courts within the EU (and vice versa), and that judgments given by the chosen court in third 
countries would be eligible for recognition and enforcement within the EU (and vice versa). 
There would be no negative so cial impacts for the weaker 
parties in the area of insurance contracts. 
Implementation costs Very low (same as in policy option 5). 
5.9. Policy option 7 — combination of policy options 6a and 6b 
This policy option achieves overall results co mparable to policy option 5 as regards policy 
objectives. By excluding, however , both problem areas (insuran ce matters and copyright and 
related rights) it has does not generate a nega tive effect on existing Community policies. 
Table 5.7 — Summary assessment of policy option 7 
Policy option 7 — combination of policy options 6a and 6b 
 
EN 43   EN Objective to be achieved/problem 
addressed 
 Anticipated 
impact 
(rated up to 
√√√√√ ) Explanation of rating and aspects of the 
policy option necessary to achieve impact 
To increase EU economic operators’ 
legal certainty that their preference for the choice of court to resolve international commercial disputes will be respected.  √√ Some effect: EU economic operators 
would be sure that their agreed preference of court would be respected in other Contracting Parties to  the Convention. The 
extent of legal certa inty would depend on 
the number of Contracting Parties. Operators in the areas of insurance and copyrights and relate d rights would not 
benefit from the Convention.  
To increase the pred ictability of the 
choice of court to resolve international commercial disputes involving EU economic operators. √√ Some effect: EU economic operators 
would be sure that the judgment made by the chosen court would be respected in all the other Contracting Parties in all areas covered by the Convention. Operators in the areas of insurance and copyrights and related rights would not benefit from the Convention.  
To safeguard EU economic operators’ 
rights in determining the choice of court where they ar e the weaker party. √√√ Significant effect: Community policies in 
protecting the weaker parties in the area of insurance matters and copyright and related rights would be safeguarded.  
To promote the adoption of legal 
rights protected under  EU legislation 
in courts resolving international commercial disputes involving EU economic operators outside the EU. √ Small effect: the policy option would lead 
indirectly to increased familiarity with EU law in third-country courts (with the exception of the areas of insurance and copyright and related ri ghts), because of a 
greater willingness to use courts to resolve disputes.  
Potential economic benefits to the EU 
Reduced transaction costs associated 
with legal uncertainty The reduction would be proportionate to: the contribution 
of choice-of-court issues to overall legal uncertainty; the countries ratifying the Conve ntion; and the additional 
number of choice-of-court agreements entered into. 
Effects expected to be positive. 
Reduce time and costs of resolving disputes The reduction would be proportio nate to: the number of 
disputes that would be resolv ed in court; and the relative 
costs of courts versus other means of resolving disputes. 
Effects expected to be positive. 
 
EN 44   EN Policy option 7 — combination of policy options 6a and 6b 
Objective to be achieved/problem 
addressed 
 Anticipated 
impact 
(rated up to 
√√√√√ ) Explanation of rating and aspects of the 
policy option necessary to achieve impact 
Increases in international trade The decrease in uncertainty might work as an impetus for 
increased interest in concl uding international contracts 
and thus increase the amount of trade.  
Preconditions and essential accompanying measures The benefits to EU economic operators that emerge from 
this policy option are based on the assumption that the 
main commercial partners also ratify the Convention. 
Complementarity with existing (and 
forthcoming) acquis This policy option would affect the Brussels I Regulation, 
in particular its Arti cle 23 and the rules on lis pendens 
(Chapter II, Section 9)  when one of the parties to the 
dispute has residence in the EU and the other party has 
residence in another Contracting Party . 
Economic and social impacts in EU 
and third countries  The potential for increased international trade with third 
countries is high. 
Litigants would have an increased guarantee that their 
choice-of-court agreements in favour of a court in a third country (Contracting Party to the Convention) would be upheld by the courts within the EU (and vice versa), and that judgments given by th e chosen court in third 
countries would be eligible for recognition and enforcement within the EU (and vice versa). 
No negative social impacts on the weaker parties in the 
area of insurance and copyr ight and related rights. 
Implementation costs Very low (same as in policy option 5). 
6. COMPARISON OF THE POLICY OPTIONS  
6.1. Comparison of individual policy options 
In Section 5 each policy option has been asse ssed against a number of different criteria 
derived from the policy objectives and the wider c onsiderations of costs and benefits. In this 
Section the assessments of the different policy options are compared with each other in order 
to highlight factors in favour  or against their adoption. 
All of the policy options (excep t policy option 1) would reduce th e costs of legal uncertainty 
(the general objective as identified in Sectio n 3), and thus have th e potential to increase 
international trade and investment and he nce lower prices of goods and services. 
 
EN 45   EN Table 6.1 presents a comparative assessment of the policy options in terms of achieving the 
specific objectives and other criteria used in Section 5. 
Table 6.1 — Comparative assessment of policy options 
Assessment 
CriteriaÈ 
Policy OptionsÆ 1. 
‘Passive’ 
status quo 2. 
‘Active’ 
status quo 3. 
Provision 
of “public insurance” 4. 
Awareness 
raising 5. 
Conclusion 
no exclusions 6a. 
Conclusion 
excluding copyright  6b. 
Conclusion 
excluding insurance 7. 
6a +6b 
To increase EU 
economic operators’ 
legal certainty that 
their preference for the choice of court to resolve international 
commercial disputes 
will be respected. 0 √ 0 0 √√√ √√√ √√√ √√ 
To increase the 
predictability of the choice of court to 
resolve international 
commercial disputes involving EU economic operators. 0 √ 0 0 √√√ √√√ √√√ √√ 
To safeguard EU 
economic operators’ 
rights in determining the choice of court where they are the 
weaker party. 0 √ √ √ √√ √√√ √√√ √√√ 
To promote the 
adoption of legal rights protected under EU legislation in 
courts resolving 
international commercial disputes involving EU 
economic operators 
outside the EU. 0 √ 0 0 √√ √√ √√ √ 
Economic and social 
benefits. 0 √√ √√ √√ √√ √√√ √√√ √√√ 
Economic and social 
costs. 0 0 Potential 
competition 
effects 0 Conflicts 
with 
Community 
policies Conflicts 
with 
Community 
policies Conflicts 
with 
Community 
policies 0 
Implementation 
costs. 0 Very low High Low to 
medium Very low Very low Very low  Very low 
Conflicts with 
Community policies. No No No No Potentia l Potential Potential 0 
 
EN 46   EN Preferred option. No No No No No No  No  Yes 
 
6.2. The preferred option 
In the light of the assessment in Table 6.1 the preferred option is policy option 7 which 
involves the conclusion by the Community of  the Convention with declarations under 
Article 21 concerning copyright and related rights and insurance matters. Even though policy 
options 5, 6a and 6b attain slightly better ove rall results in achieving the policy objectives 
(with the exception of the policy objective of safeguarding EU economic operators’ rights), 
they all create potential conf licts with Community policies.  Policy option 7 does not create 
such conflicts and is therefore preferred. This  option is also expect ed to generate more 
economic and social benefits. 
7. ELABORATION OF THE PREFERRED OPTION  
7.1. The potential scale and nature of impacts of the preferred option 
The general objective of the preferred policy op tion is to reduce legal uncertainty for EU 
economic operators. In doing so, the conclusion of the Convention should act as a stimulus to 
international trade and hence contribute to reduc ing the costs of goods a nd services in the EU. 
Legal uncertainty is only one of several factors that constrain international trade. The 
preferred option would reduce lega l uncertainty, but would not elim inate it. In particular, the 
preferred option would increase the likelihood  that choice-of-court agreements, and court 
judgments made in the agreed courts, would be respected and enforced. 
The extent to which the benefits possible from the preferred option would accrue would 
depend on the following factors: 
• Which third countries ratify the Convention.  Here it is possible to quantify the scale of 
benefits that will accrue, as they would be proportionate to the amount of current and 
future trade between the EU and these countri es. The EU’s largest trading partner is the 
USA (18% of total EU external trade). The USA has indicated its willingness to ratify the 
Hague Convention; there is also evidence th at US economic operators would be more 
likely to make recourse to the courts if the Convention were ratified (as showed by the 
ABA survey). The second largest ‘trading partne r’ is the EFTA countri es (11%). In this 
case the preferred option would not increase le gal certainty because the EFTA countries 
are already covered by the Lugano Convention44. The third largest trading partner and one 
of growing importance is China (10%). Becau se of the differences in commercial law 
between the EU and China and the latter’s growing importance as a trading partner, 
reductions in legal uncertainty c ould be particularly beneficial. The next largest EU trading 
partners and their respective shares of tota l EU external trade ar e as follows: Dynamic 
Asian Economies45 (9%), OPEC countries (9%), Russi an Federation (8%), Japan (5%), 
Africa and Caribbean (5%) and Turkey (4%). All of these trading part ners could ratify the 
                                                 
44 Lugano Convention, Texts: Convention and Protocols 
http://curia.europa.eu/common/recdoc/convention/en/c-textes/_lug-textes.htm  
45 Singapore, Thailand, Malaysia, Korea, Taiwan and Hong Kong. 
 
EN 47   EN Convention, though it is consider ed unlikely that the OPEC c ountries would choose to do 
so because this would require mutual recogniti on of western courts by Islamic States. Thus 
the preferred option could lead to a potential reduction in legal uncertainty affecting up to 
59% of the EU’s external trade. The estim ated total value of trade in 2006 was 2 260 
billion euro, 59% of this amounts to 1 330 bill ion euro. The reduction in legal uncertainty 
would be proportionate to the trading partners that ratify the Convention. 
• The extent of exclusions via Article 21.  Because of the exclusions from the scope of the 
Convention under Article 21 in the preferred option, the potential for decreasing legal 
uncertainty is reduced to some extent. Alt hough it is not possible to measure the scale of 
copyright and related rights and insurance in EU external trad e, the relative importance of 
this economic activ ity within the EU provides some i ndication of their likely importance 
more widely. The copyright industry c ontributed more than 1.2 trillion euro46 to the EU 
economy, while the size of the global non-life insurance market was over 1.1 trillion euro 
in 200547, although their importance in international trade is likel y to be less. Some third 
countries also indicated during the Convention negotiations their intent or need to exclude 
additional matters under Article 21. For example, Canada would exclude asbestos-related 
matters. 
• The nature of international contracts.  It is likely that the conclusion of the Convention 
would have greater effects on larger and more  complex forms of contract rather than 
smaller and more straightforward contracts involving the purchasing of goods or services. 
It is estimated that the costs of individual international business-to -business cases brought 
to court is in the order of 40 000 euro. No rmally only contracts that involve disputes 
considerably in excess of this amount are li kely to be brought to court. The preferred 
option would not directly influence the nature of contracts. 
• Whether or not economic operators actua lly make choice-of-court agreements.  Conclusion 
of the Convention would reduce legal uncertain ty for companies that choose to conclude 
choice-of-court agreements. Empirical in formation on the number of choice-of-court 
agreements is limited. A survey carried out by the ICC showed that almost 75% of companies specify courts in more than half of their international contracts. In the ABA 
survey
48 over half of respondents said that more  than half of their contracts included 
choice-of-court agreements. It is probable th at the majority of international contracts 
include such agreements, but many do not. The preferred option could increase companies’ 
propensity to include choice-of-court agreements  in international contracts, especially if 
the conclusion of the Convention were to  be accompanied by publicity and raised 
awareness. 
• Whether or not disputes woul d be resolved in courts.  As evidenced in Section 2, most 
disputes concerning business-t o-business internati onal contracts are resolved by means 
other than courts. Indeed, cour ts are perceived to be relativ ely expensive and very much a 
last resort. However, the conclusion of the Convention could increase the propensity to use 
courts as a means to solve disputes. 
                                                 
46 The Contribution of Copyright and Related Rights to the European Economy 
http://ec.europa.eu/internal_market/ copyright/docs/studies/etd2002b53001e34_en.pdf  
47 Business Insurance Sector  Inquiry. Interim Report. EFTA Surveillance Authority 
http://www.eftasurv.int/information/reportsdoc uments/competitionreports/dbaFile11953.pdf  
48 See footnote 4. 
 
EN 48   EN 7.2. Estimate of best-case economic benefits 
The above analysis can be used to estimate th e best-case economic bene fits that could accrue 
from the preferred option: 
The total international trade that could be a ffected is currently 1 800 billion euro per annum, 
although it is estimated that around half of  this trade is intra-company trade. 
All business transactions involve  an element of lega l uncertainty. Legal un certainty increases 
where the transactions are international. The preferred option would reduce some of the legal 
uncertainty experienced in international trade, bri nging it closer to leve ls of uncertainty that 
exist within the EU under the Brussels I Regu lation and within the EU and EFTA countries 
under the Lugano Convention. 
In the absence of reliable data49 about the total costs of lega l uncertainty, it  can only be 
deduced from the fact that such costs are cons idered to be just a small component of the 
‘additional’ risk of international business that th e total costs of legal certainty will not likely 
exceed 1% of the value of inte rnational trade. Risks from s ecurity, cultural and political 
concerns drive businesses to expect larger return s from their dealings in international markets 
compared with domestic markets, in part to o ffset potential costs in seeking redress where 
contracts are not complied with. 
The best-case reduction in legal uncertainty would be a proporti on of all legal uncertainty. It 
is reasonable to assume that if  the preferred option is adopted, this proportion would increase 
(due to similarities developi ng between legal systems and thei r outcomes). For the sake of 
argument it is reasonable to assume that 50% of legal uncertainty would be removed by the 
conclusion of the Convention. 
The best-case reduction in legal uncertainty due to the preferred option would not affect the 
excluded sectors of internationa l commerce, in particular c opyright and related rights and 
insurance (i.e. perhaps 8% of extra-EU international trade). 
The best-case reduction in lega l uncertainty due to the prefe rred option would affect only 
contracts with choice-of-court agreements. It is reasonable to assume that 70% of the value of 
international trade would be subjec t to choice-of-court agreements. 
The best-case reduction in legal uncertainty due to the preferre d option would mainly affect 
contracts where resolution of disputes by court was a likely option. It is reasonable to assume 
that only a minor share, say 25%,  of the value of international trade is of this type and 
alternative methods of dispute resolution will continue to be  the main mechanisms applied. 
Given these (rather tenuous) assumptions, a best- case estimate of the value of the reduction in 
legal uncertainty due to the preferred option would be: 1 330 billion euro per annum x 0.01 
(legal uncertainty) X 0.5 (legal uncertainty  affected by the preferred option) x 0.92 
(exclusions) x 0.7 (value of international trade affected by choice-of-court agreements) x 0.25 
                                                 
49 Although this Impact Assessment includes estimates of the costs of legal uncertainty these are, 
unfortunately, highly uncertain. Although there are an alytical studies of the factors influencing legal 
uncertainty, little work appears to have been done to quantify it in monetary or other terms. This is 
regrettable as an improved theoretical and empiri cal understanding of the phenomenon would be of 
great relevance to policy making and could indicate the degree of priority that should be given to efforts 
to reduce what is a significant constraint on international trade. 
 
EN 49   EN (value of trade where courts are likely to be us ed). That is, assuming all trading partners ratify 
the Convention (except OPEC coun tries), possible benefits in the order of 1.07 billion Euro 
per annum can be achieved. Achi eving such benefits would, however, depend, in particular, 
upon which trading partners ratify the Convention, th e propensity to enter into choice-of-court 
agreements, the costs of going to court as opposed to using other means of dispute resolution and, critically, the success of  enforcement of judgments recognised under the Convention. 
7.3. The costs of the preferred option 
The preferred option will involve only small im plementation costs associ ated with preparing 
the legislative instruments linked with the signing and conclusion of the Convention by the 
Community, including drafting of  the exemptions under Article  21, and involved in the 
process of signing and concl uding the Convention on behalf of the Community. However, 
given that the Convention will not generate benef its to the EU unless EU trading partners also 
ratify it, some administrative and diplomatic  resources will be required to encourage and 
negotiate with the potential Cont racting Parties. There would al so be merit in spending some 
resources to publicise the conclusion of  the Convention and its ramifications. 
The preferred option does not generate either  compliance or administrative costs for EU 
businesses trading internationally. Companies w ould remain free to include choice-of-court 
agreements in their contracts or to continue using alternat ive dispute-resolution methods. 
7.4. EU added value, proportionality and subsidiarity 
The preferred option of the Community conclu ding the Convention with certain exclusions 
under Article 21 would generate si gnificant EU added va lue. Firstly, there w ould be one set of 
rules for EU operators within each of the Member  States and thus, in e ffect, the ‘level playing 
field’ within the EU created by the Brusse ls I Regulation would be extended to the 
Contracting States to the Conven tion. Secondly, a series of bila teral agreements with varying 
exemptions could be counterproductive in trying  to decrease legal uncertainty where the EU’s 
major trading partners are likely to wish that th eir goods and services can be traded within the 
EU and with other trading partners under th e same regimes concerning choice-of-court 
agreements. 
As indicated above, the costs of concluding th e Convention are very lo w while the potential 
economic benefits are large. There are only a few potential ‘downsides’ to concluding the 
Convention. These might, for example, include the obligation arising un der the Convention to 
respect within the EU judgments given by third-country courts which are considered 
controversial. However, the possi bility to refuse recognition of such judgments on the basis of 
public policy (under Article 9(e) of the Conventi on) is always available, and it can also be 
anticipated that the number of such judgments would gradually decrease due to ‘convergence’ 
in case law. The preferred option is thus proportionate. 
Given the existence of exclusive Community competence in the area under the scope of the 
Convention, and the fact that individual Memb er States cannot achieve the defined objective 
through individual action, the conclusion of the C onvention is appropriate and the principle of 
subsidiarity will have been followed. 
 
EN 50   EN 7.5. Measures to maximise the bene fits of the preferred option 
There are two ways in which all the potential benefits of the preferred option could be 
improved: 
• The scale of benefits accruing depends on the number of other Contra cting Parties to the 
Convention. Once several countr ies have ratified the Conventi on, the potential costs of not 
ratifying it need to be stressed to  those that have not ratified it. 
• The scale of benefits will partly depend upon companies’ awareness of the potential 
benefits of choice-of-court agre ements and their propensity to in clude them in contracts. It 
would be beneficial to prom ote conclusion of the Conventi on through awareness-raising 
campaigns and providing information on the ke y similarities and differences in commercial 
law, court procedures and court judgments between the EU and the other Contracting 
States. 
8. MONITORING AND EVALUTION  
It is the practice of the Hague Conference on Pr ivate International Law, under whose auspices 
the Convention was drawn up, to organise regula r meetings of its sp ecial commissions to 
evaluate the practical application of conventio ns, in order to monitor and evaluate their 
success and help resolve difficulties arising in their application and implementation. 
In addition to this institutional monitoring, the Community as a C ontracting Party should 
develop its own monitoring and evaluation mechanism. 
Table 8.1 provides suggestions for monitoring and evaluation criteria, indi cators and potential 
methods to inform these criteria. Achievement of the general objective could be monitored by 
reviewing trade sta tistics. However, there are many factors affecting trade and, as indicated in 
Section 7, the reductions in lega l uncertainty that can follow from concluding the Convention 
are presumed to be very small when compared  with the scale of in ternational trade. The 
statistics are not sufficiently ‘f ine-tuned’ to enable estimates of the contribution the preferred 
option would make when implemented. 
The monitoring and evaluation will also need to  focus on operational objectives. Examples of 
indicators are given in Table 8.1. There are no suitable ‘ready-made’ sources of information 
pertinent for accurately assessing the scale and nature of existing problems, and hence 
monitoring in the future the extent to wh ich these problems will have been reduced. 
In these circumstances the best way to proceed would be to adopt the same procedure as for 
other legislative instrume nts in the area, i.e. by reviewing th e functioning of the Convention at 
regular intervals (for instan ce every four years) assisted  by a study done by an external 
source. This approach would generate costs50, but in the absence of specific data such an ad 
hoc approach seems to be the most suitable. 
Also, at a later stage, further i ssues should be analysed such as: 
                                                 
50 The value of such contracts varies between 60 000 and 300 000 euro, depending on the scope of the 
review. 
 
EN 51   EN • exploring the possibility of the Community making a declaration under Article 22 of the 
Convention which allows its scope to be exte nded to cover recognition and enforcement of 
non-exclusive choice-of-court agreements; 
• excluding additional matters under Article 21 when the need arises due to new acquis; and 
• the possibility of withdrawing some or all of the declarations made under Article 21. 
Finally, if the Convention is concluded by the Community, an ex post  evaluation should be 
carried out in the future to assess possible changes in companies’ perception of the Convention and the use of choice-of-court agreements. 
Table 8.1 Potential monitoring  and evaluation indicators 
General Objective Potential indicators Notes, sources and 
responsibilities 
To promote international trade (external 
to the EU) and investment, through 
reducing legal uncertainty in commercial 
contracts Levels of trading with main EU trading 
partners. 
Levels of trading with main EU trading 
partners in different sectors. It will be useful to distinguish between 
those countries that have ratified the 
Convention and others. 
Use could be made of existing trade 
statistics. 
Specific objectives Given under operational objectives 
below. In broad terms it would be helpful if 
responsibility for monitoring and 
evaluation were shared between DG JLS 
(legal impacts), DG ENTR and DG TRADE (economic impacts). In practice specific work may need to be contracted 
from third parties as the available 
secondary-source information is inadequate to properly inform evaluation of the effectiveness of the preferred 
option. 
Operational objectives   
1.1 To increase the number and value of 
contracts (between EU operators and those in third countries) indicating an exclusive choice of court.  Proportion of EU companies entering 
into choice-of-court agreements. 
Proportion of value of EU companies’ 
international trade covered by choice-of-
court agreements. 
1.2 To reduce (preferably eliminate) the 
instances of choice-of-court agreements not being respected. Number and proportion of choice-of-
court agreements not respected. Specific work may need to be contracted 
from third parties. 
2.1 To reduce the uncertainty of outcome of court judgments. Number and type of anomalous court 
judgments made by courts in third 
countries. Instances reported in press and via EU 
trade associations. 
2.2 To reduce the uncertainty that court 
judgments might not be respected by 
courts in the countries of both parties. Number and type of court judgments not 
respected. Specific work may need to be contracted 
from third parties. 
 
EN 52   EN 2.3 To reduce the uncertainty that court 
judgments would be enforced. 
 Number and type of court judgments not 
enforced. Specific work may need to be contracted 
from third parties. 
3.1 To reduce the time and costs of resolving disputes in court. The time taken and costs of resolving 
disputes (of different types) in (different types of) courts. Case histories. 
3.2To increase smaller companies’ 
willingness to enter into international 
agreements with larger concerns. 
 Numbers of SMEs entering EU external 
markets. 
Levels of trade involving SMEs in 
external markets. 
The actual courts specified in choice-of-
court agreements made by EU economic 
operators. Feedback from representatives of SMEs 
in the EU. 
Specific work may need to be contracted 
from third parties. 
3.3 To increase the likelihood that smaller companies would challenge larger concerns with whom they are in dispute. Numbers of SMEs challenging larger 
concerns. Specific work may need to be contracted 
from third parties. 
4.1 To reduce differences in the outcome 
of disputes dependent upon the country in 
which the case is heard. Number of instances where legal rights 
that would pertain in the EU are 
breached. Specific work may need to be contracted 
from third parties. 
4.2 To reduce the variation between the 
judgments made in EU courts and those 
made in third countries. Number and nature of judgments made. Qualitative assessments of convergence 
of laws and judgments illustrated by 
cases. 
 
 
EN 53   EN ANNEX 1  
Analysis of previous consultations: contribution to the Consultation Paper 
In addition to consultations with companie s, insurance companies and sectoral EU 
representatives (list in Annex 2), the answers of various stak eholders to the Consultation 
Paper have been analysed. Specific focus has been placed on those questions in the Paper 
which might give more insights for the Impact Assessment. 
The public consultation launched by the Eur opean Commission in August 2004 received a 
total of 24 contributi ons from a wide range of stakeholders . The list of res pondents is given at 
the end of this Annex. 
The table below provides an overview of respons es to the issues raised in the process of 
public consultation. The responses are classifi ed by the types of respondent and give a 
summary of opinions expressed on each particular question. Where no consensus existed on a 
particular question, the differen ce in opinions is indicated (e.g .☺ /). 
Respondents → 
Issues as outlined in 
the consultation 
document ↓ Governments 
and public 
administration NGOs, 
consumer 
and interest 
associations Industry, 
entrepreneur 
associations 
and 
companies Law and 
academic 
Do you consider the 
current exclusions 
from the scope 
sufficient?  ☺ 
/ / - ☺ 
/ 
Are these exclusions 
for industrial property 
rights sufficient? ☺ 
 / / 
- ☺ 
Is the inclusion within 
the scope for 
copyright and related 
rights acceptable and 
should the Convention 
take into account the 
position of individual 
authors as the weaker 
to a contract?  ☺ 
 ☺ 
 - ☺ 
 
Is the protection 
accorded to the 
defendant by Article 
9(c) sufficient? ☺ 
 ☺ 
 NA ☺ 
 
Should the 
Community avail 
itself of the possibility ☺ NA / / 
 
EN 54   EN given in Article 18 
and make a 
declaration in respect 
of courts within the 
Community?  
Is it acceptable, as a 
matter of general 
policy, that the 
Convention would 
prevail over other 
previous international 
instruments, thus 
affecting the 
international 
obligations assumed 
prior to the ratification 
of this Convention? / 
- NA ☺ ☺ 
Do you think that the 
Convention should 
allow the recognition 
and enforcement of 
judgments given on 
the basis of a non-
exclusive choice-of-
court agreement? 
 / NA ☺ 
/ ☺ 
Key to symbols: 
☺ Yes (most respondents) 
/ No (most respondents) 
- Mixed opinion expressed NA No Answer on specific question This following Section of the Annex presents an overview of responses to a number of 
selected issues particularly relevant to the Impact Assessment and raised in the process of 
public consultation. The re levant questions in the Consultati on Paper that have  been analysed 
are: 
Q2. Do you consider the current excl usions from the scope sufficient? 
Q3a. Are these exclusions for indus trial property rights sufficient? 
Q3b. Is the inclusion within the scope for c opyright and related rights  acceptable and should 
the Convention take into account the position of individual authors as the weaker to a 
contract? 
Q 14. Is the protection accorded to th e defendant by Article 9(c) sufficient? 
 
EN 55   EN Q22. Should the Community avail itself of the po ssibility given in Ar ticle 18 and make a 
declaration in respect of c ourts within the Community? 
Q24.a Is it acceptable, as a matter of general po licy, that the Convention would prevail over 
other previous international inst ruments, thus affecting the in ternational obligations assumed 
prior to the ratificati on of this Convention? 
Q 26.a Do you think that the Convention shoul d allow the recognition and enforcement of 
judgments given on the basis of a non- exclusive choice-o f-court agreement? 
It has to be stressed that due to the low nu mber of responses to the Consultation Paper the 
sample is not fully representative. 
Q2 of the Consultation Paper: Do you cons ider the current exclusions from the scope 
sufficient? 
Member States and institutional bodies 
The attitude of this group of stakeholders towards the issue of  current exclusions is mixed. 
Two Member States reacted positively, stating that the exclusions mentioned under Article 2 
were sufficient. On the other hand, the Czech  Republic and Russia stated that the list of 
exclusions is not sufficient enough as: 
Article 2 should also exclude in ternational transport by air. 
Only disputes related to employment contract s are excluded, while many kinds of agreement 
to which an employee is a party woul d fall under the scope of the Convention. 
NGOs, consumer and interest organisations  
The majority of respondents expressed a negative opinion. They pointed out that: 
• Contracts that restrain competition or impe de the transfer of technology should be 
excluded. 
• It is of critical importance th at the current wording of Article  2(2)(k) be revi sed to exclude 
trademark validity determinations. 
• It would be very detrimental to deprive natu ral persons acting as entrepreneurs from the 
benefit of the Convention. This exclusion (Article 2( 1)(b) should not affect contracts with 
authors, including colle ctive bargaining agreem ents negotiated, for example, with authors 
and performers. 
Industry, entrepreneur associations and companies 
The two organisations which answered this spec ific question expressed some concerns about 
the current exclusions from the Convention. 
• The wording in Article 2(2)(k) should different iate more precisely between the rights being 
subject to the Convention and those that shou ld be left aside. Ot herwise, the uniform 
interpretation provided by  Article 21 is at risk. 
 
EN 56   EN • The current exclusions raise a problem concerning the definition of “consumer”. In fact, 
European documents use the definition of consumer as “any natural person who is acting 
for purposes which are outside hi s trade and business profession” . It is importa nt to keep 
this positive definiti on and not the one propos ed by the Convention. 
Law and academic 
The attitude of this group of stakeholders towa rds exclusions was varied. Some concerns were 
pointed out: 
• The bracketed words in Article 2(2)(f) shou ld be retained, ther eby excluding all other 
admiralty and maritime matters. Maritime law is the subject of a number of international 
agreements. In particular, the Convention should apply to claims for salvage or the ability 
of ship-owners to limit their li ability, or cargo owners’ liabili ty to pay general average. 
Equally, passenger claims should be exclud ed as they are governed by the Athens 
Convention. 
• Stronger protection should be introduced fo r weaker parties falli ng within the current 
scope. 
• Under certain circumstances (see the example of the passenger in th e Consultation Paper) 
persons who should be excluded will remain within the scope of the Convention. Non- 
profit organisations should also be exclude d because the Convention is meant to be 
applicable to business-to-business situations. 
• Not all natural persons should be excluded fr om the scope of the Convention. The purpose 
of the exclusion is to protect weaker par ties. Consumers are generally accepted to be 
weaker parties, but a natural person acting in a commercial capacity is not necessarily 
either weak or weaker than a company. 
Q3a. Are these exclusions  for industrial property rights su fficient or on the contrary too 
broad? 
Member States and institutional bodies 
Most of the Member States responding to this question replied positively. Only one of them 
stated that the scope of th e Convention should be extende d, taking into account how 
intellectual property rights and particularly in dustrial property rights can be subject to 
litigation in practice, including litigation before the designated court pursuant to choice-of-
court agreement. 
NGOs, consumer and interest organisations 
The majority of this group of stakeholders responded negatively  on this issue. They pointed 
out that: 
• It is necessary to include the following phr ase: “The Convention shall not apply to 
proceedings that have as their main object any of the following matters — ... n) parallel 
trade or the exhaustion of in tellectual property rights”. 
 
EN 57   EN • IPR is not a defined legal term as different legal fields summed up as IPR have different 
bases. It is important to break  this down field and create sui generis  provisions. Patent law 
and copyright law, for example, are totally di fferent legal fields. Trademarks and patents 
are granted by the State while copyr ight has a natural rights foundation. 
• Decisions on trademark validity should be within  the exclusive jurisdic tion of the courts or 
administrative agencies of the State where the rights arose, and decisions on trademark 
validity made by other States should not  be within the sc ope of the draft. 
• The current wording of Article 2(2)(k) excl udes trademark validity determinations from 
the scope of the draft. A decision on trademark validity rendered in the context of proceedings over a trademark licence agreement w ould be within the sc ope of the draft as 
currently worded. As claims of trademark va lidity often arise in di sputes over trademark 
licence agreements, it is critically important that the current wording of Article 2(2)(k) be revised to exclude trademark validity determinations. 
• Another problem with Article 2( 2)(k) is its limitation of agreem ents within the scope of the 
draft to licence agreements and assignment agreements. Trademark owners enter into many 
other sorts of agreement, such as agency agreements, distribution agreements and coexistence agreements. It would benefit trad emark owners for these agreements to be 
within the scope of the draft. 
• There is a need to exclude from the scope the validity of IPRs when this validity depends 
on the sovereign act of a State.  However, infringement proc eedings should not be excluded 
from the Convention. Moreove r, Article 2(2)(k) of WD 110 is very complex and may 
create diverging interpretations as to what is  excluded or not concerning IPRs other than 
copyright. Moreover, it will be es sential to list whic h IPRs are exactly excluded and decide 
whether there should be an exhaustive list of exclusion. An exhaustive list or some other 
approach, which would preserve legal certainty, would be pref erred. This list should be 
limited to those IPRs agreed upon internationally. 
Industry, entrepreneur associations and companies 
The two organisations which an swered this question expresse d some concerns about the 
exclusions for industrial property rights. 
• It is not acceptable that the Convention stipulat es special treatment for the matters linked to 
intellectual property (though ex cluded from the scope of the Convention under Article 
2(2)(k), stating that a chosen  court can stay proceedings wh en the decision incidentally 
relates to the matters excluded fr om the scope of the Convention. 
• The wording in Article 2(2)(k) should differentia te more precisely between the rights that 
are subject to the Convention and th ose that should be left aside. 
Law and academic 
The majority of stakeholders who answered  this question commented positively. However 
some concerns were put forward: 
• It is difficult to understand the reason why copyright and related rights are treated 
differently from other intell ectual property rights under th e Convention. Copyright, like 
 
EN 58   EN other IPRs, is territorial in scope and depends for its recogni tion on the national law of the 
State where protection is sought. 
• It is not clear why “copyright and related rights” should be singled out for special 
treatment. There seems no reason not to include other unregistered rights, such as database 
and design rights. It is al so unclear why only licence a nd assignment agreements are 
covered. There are other forms of agreement which relate to unregistered intellectual 
property rights, such as security agreements, settlement agreements, coexistence agreements and delimitation agreements. 
• The current Regulation under the Convention s eems complicated and is probably difficult 
to administer in practice. A point of discussion would be an exception for individual 
authors — as the creators of their works — as  the weaker party to a contract who might 
require some appropriate safeguard. 
Q3b. Is the inclusion within the scope for co pyright and related rights acceptable and 
should the Convention take in to account the position of i ndividual authors as the weaker 
to a contract? 
Member States and institutional bodies 
All the Member States that responded to this question answered positively. 
NGOs, consumers and interest organisations 
The majority of this group of stakeholders replied positively. However, one stated that: 
• Copyright is seen as an indi vidual author’s right in Germ any. If physical persons are 
excluded, there would be nobody to exercise such rights. Therefore, compatibility with the 
concept of author’s rights has to be check ed. The weaker party should be protected by 
public policy exception. The phrase “related righ ts” is not defined. It has to be affirmed 
that exclusive rights such as patents are not “related rights”. 
Law and academic 
Most stakeholders answering this question commented positively. However, some concerns 
were put forward: 
• Copyright and related rights shoul d also be outside the scope of the Convention, except for 
proceedings to enforce a licence. Intellectual prop erty rights are territorial in nature, being 
an expression of the sovereignty of the St ate conferring protec tion. Decisions on the 
validity of individual ri ghts should be reserved to the co urts of the country conferring 
protection. It will be difficult to make a princi pled distinction between those authors that 
are truly in a weaker bargaining position, and internationally successf ul writers able to 
negotiate from an equal bargaining position. 
Q 14. Is the protection accorded to the de fendant by Article 9(c) sufficient? 
Member States and institutional bodies 
Most Member States that responded to this  question answered pos itively. However, one 
(Latvia) pointed out that: 
 
EN 59   EN • In relation to protection accorded to the defendant, another possibility could be 
contemplated whereby the defendant has the opportunity to appear before a court and 
defend his position in the process of litigation. 
NGOs, consumers and interest organisations 
All the stakeholders who answered this question commented positively. 
Law and academic 
Similarly to NGOs, consumers and interest or ganisations, law and academic stakeholders 
answered this question positively. 
Q22. Should the Community avail itself of the possibility given in Article 18 and make a 
declaration in respect of courts within the Community? 
Member States and institutional bodies 
Most Member States that responded to this  question answered pos itively. However, one 
pointed out that: 
• The possibility given in Article 18 limits the benefit of the Convention and would have to 
be abolished. The chosen judge should not have  the possibility to refuse to exert his 
competence. 
Industry, entrepreneur associations and companies 
One stakeholder expressed a nega tive opinion towards the possibi lity given in Article 18. As 
the body stated, there are severa l specialised courts in Europe . For example, the London court, 
specialised in matters concerning maritime law, is often chosen even if no connection exists 
with the United Kingdom or even the EU. 
Law and academic 
Most law and academic stakeholders that re sponded to this question answered negatively. 
They pointed out that: 
• The Community should not avail itself of th e possibility under Article 18 as the same 
considerations applying to domestic cases (i n the sense of domestic  to one particular 
Member State) do not apply for the Commun ity as a whole. Th ere is not a single 
“Community interest” at stake.  Such declarations should be a matter for individual States. 
• If individual States do not wi sh the resources of their cour ts to be used in disputes 
unconnected with that State, it is a matter fo r them. Some States, such as the UK, regard 
litigation services as prov iding a valuable export. 
• The English courts are commonly chosen by pa rties as a neutral fo rum even though they 
may have no other connection with the parties or the dispute. The promotion of London as 
a forum for resolution of international litigatio n is and has for many years been a policy of 
the United Kingdom, and generates consider able invisible earnings for the UK. The 
English courts have also developed considerable expertise in insurance and maritime law disputes even where the accident or policy has no connection with the UK. Therefore, 
 
EN 60   EN Article 18 should not apply to the English co urts. Should other Stat es take a different 
approach, and it is possible to apply Article 18 on a basis that  varies from Member State to 
Member State, then there would not be any objection to the European Commission 
entering a reservation in respect of those states. 
Q24.a Is it acceptable, as a ma tter of general policy, that the Convention would prevail 
over other previous international instrume nts, thus affecting the international 
obligations assumed prior to the ra tification of this Convention? 
Member States and institutional bodies 
All the Member States that responded to this question an swered negatively. The governments 
have pointed out that: 
• Article 23 lacked clarity and coherence in its actual outline.  The interlinking with other 
international instruments is particularly complex and raises complex concerns related to its 
application. It is therefore not acceptable that the Convention would prevail over previous 
international instruments as it would affect the stability that these instruments have already 
created. 
• The current Convention should not put States in  a position where they are forced to violate 
previously accepted international obligations. 
Industry, entrepreneur associations and companies 
The two organisations which answered this question replied positively on the Convention 
predominating over other previous  international instruments. 
It seems logical that, in case of conflict between the Convention and Regulation (EC) 
No 44/2001 on judicial competence, the rules se t by the Convention would prevail (as far as 
forum selection clauses between  an EU Member State and a third country are concerned). 
Law and academic 
Similarly to the previous group of  stakeholders, the majority of  organisations which answered 
this question expressed a positive opinion on the Convention predominating over other previous international instruments. 
However, a stakeholder stated that: 
• An approach that placed Member States in br each of their existing international obligations 
is not acceptable. It follows from Article 30( 4) of the Vienna Convention on the Law of 
Treaties that whilst the Member States may agree to modify the requirements existing 
under the Brussels Regulation inter se , they cannot modify thei r obligations towards non-
Member States that are Cont racting Parties to the Lugano Convention without denouncing 
those treaties. On the assumpti on that the Lugano Convention is  retained, it wi ll need to 
prevail over the proposed Convention in respec t of any judgment required to be enforced 
by a Contracting State to the Lugano Conve ntion that does not ratify the proposed 
Convention. The position will need to be the same in re spect of any other international 
convention or treaty to which a Member State is party which does not allow for a choice of 
court, or contains rules on exclusive jurisdiction. As it doe s not achieve this result, 
Article 23(4) would place Member States in breach of their obligations under public 
 
EN 61   EN international law. The rules set out in the C onvention should also be subject to existing 
international conventions or tr eaties to which a Contracting St ate is subject which regulate 
a particular area or subject ma tter and contain rules that restri ct party autonomy, or rules of 
exclusive jurisdiction. 
Q 26.a Do you think that the Convention sh ould allow the recognition and enforcement 
of judgments given on the basis of a non-exclusive choice-of-court agreement? 
Member States and institutional bodies 
The attitude of this group of stakeholders towards this issu e was varied. One Member State 
was in favour of recognition and enforcemen t of judgments given on the basis of non-
exclusive choice-of-court  agreements while other countries  voiced more negative comments: 
• Considering the difficulties met during negotia tions, a realistic way should be preferred. 
The Convention would have to be limited to exclusive choice-of-court agreements. 
• This issue could be subject to further debate and discussion. By providing for the 
possibility to recognise judgments delivered by the courts designa ted in non-exclusive 
choice-of-court agreements, the scope of the Convention would become substantially 
broader as would its prac tical effects and utility. 
NGOs, consumer and interest organisations 
Similarly to the Member States, NGOs, consumer  and interest organisations also expressed 
varied opinions. One stakeholder responded pos itively, while another supported limiting the 
Convention to recognition and en forcement of judgments given on the basis of exclusive 
choice-of-court agreements. 
Law and academic 
All the stakeholders that answered this question were in favour of recognition and 
enforcement of judgments given on the basis of non-exclusive choice -of-court agreements. 
One argued that such extensi on was of vital importance as: 
• Non-exclusive jurisdiction clauses are very commonly used in international trade and 
finance. The use of a non-exclusive jurisdic tion clause reflects a legitimate choice by 
parties where they wish the chosen forum to have  jurisdiction but to retain the flexibility to 
bring proceedings before any other court of  component jurisdiction. Such clauses respond 
to a genuine commercial need and would not be  used in business-to-business contracts if 
this were not the case. Failure to include such clauses will seriously reduce the advantages of an international convention for international trade and finance. 
List of respondents to the Consultation Paper 
Governments and public administration 
Délégation française 
Czech Republic (Ministry of Justice) 
 
EN 62   EN Estonia 
Ministry of Foreign Affairs of the Russian Federation 
Latvia 
NGOs, consumer and interest associations 
European Consumers’ Organisation 
British Music Rights 
Foundation for a Free Information Infrastructure (FFII) 
European Grouping of Societies of Authors and Composers (GESAC) 
International Trademark Association (INTA) 
Motion Pictures Association (MPA) 
Trade Marks, Patents and Designs Federation (TMPDF) 
Industry, entrepreneur associations and companies 
Association Française des En treprises d’Investissement 
BASF 
EUROCHAMBRES (Association of European Chambers of Commerce and Industry) 
La Fédération Bancaire Française 
MEDEF 
Federal Association of German Industry 
Law and academic 
Council of Bars and Law Societie s of the European Union (CCBE) 
Clifford Chance  
Conference of the Notariats of the European Union 
Deutscher Richterbund 
Slaughter and May international law firm 
Faculty of Law, Bond University, Australia 
 
EN 63   EN ANNEX 2  
Companies and other stakeholders interviewed  
Companies 
Skanska AB (Sweden) 
Innogenetics (Belgium) 
Ontex NV (Belgium) 
Micotron a/s (Denmark) 
Packard Bell (France) 
Umicore SA-NV (Belgium) 
Hamilton Precision Metals Europe (HPM) (France) 
Teyssou Rhônes Alpes SAS (France) 
Pom’Alliance (France) 
Medicasoft (France) 
Dismat SAS (France) 
Acim Jouanin S.A. (France) 
Decanova NV (Belgium) 
HORLOGES HUCHEZ SAS (France) 
Norail S.A. (France) 
Dagnaud Fabrications (France) 
Indusafe Bvba (Belgium) 
SENSY (Sensors and Synergy) SA (Belgium) 
Thermax Ltd (Belgium) 
Maersk Benelux BV (Belgium) 
Nestlé (Switzerland) 
 
EN 64   EN Insurance companies 
ATE Insurance (UK) 
Euler Hermes Credit Insurance (Belgium) 
Law firms 
Carlos de Sousa e Brito & Associados 
Hannes Snellman Attorneys at Law 
ABA 
Business and sectoral organs 
Agency of Lithuanian Copyr ight Protection Association 
British affiliate of the ICC