EN    EN EN 
 
EN    EN  COMMISSION OF THE E UROPEAN COMMUNITIES 
Brussels, 5.9.2008 
SEC(2008) 2390 
  
COMMISSION STAFF WORKING DOCUMENT 
Accompanying document to the  
  
Proposal for a Council decision 
 
on the Signing by the European Community  of the Convention on Choice-of-Court 
Agreements 
  
SUMMARY OF THE IMPACT ASSESSMENT 
 
{COM(2008) 538 final } 
{SEC(2008) 2389 } 
 
EN 2   EN 1. PROCEDURAL ISSUES AND THE CONSULTATION OF INTERESTED PARTIES  
The Impact Assessment was prepared on the basis of a “Study to Inform an Impact 
Assessment on the Ratification of the Hague Co nvention on Choice-of-Court Agreements by 
the European Community”, which was under taken 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 Legal 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. 
The Impact Assessment was based on the above mentioned 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 th e Hague, reviews of the results  of surveys undertaken by the 
International Chamber of Commerce (ICC)
2 and the American Bar Association (ABA)3 as 
well as analysis of trade st atistics (from Eurostat). 
2. PROBLEM DEFINITION  
Matters of internationa l jurisdiction of courts and recogni tion 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 commercial matters (“the Brussels I Regulation”)4. 
According to the case law of th e European Court of Justice5, issues of international 
jurisdiction and recogniti on and enforcement of judgments w ith respect to third countries 
come under exclusive external Community compet ence. This means that Member States are 
no longer in a position, either individually or coll ectively, to enter in to international 
obligations in respect of third countries as regards matters governed  by external Community 
competence. 
Conclusion of the Convention on Choice-of-Co urt Agreements under the Hague Conference 
on Private International Law in 2005 presented an opportunity  for creating a worldwide 
judicial alternative for business-to-business di spute resolutions in cases where the parties 
concluded a choice-of-court agreement. 
                                                 
1 GHK Consulting Ltd, Birmingham; study available at 
http://ec.europa.eu/dgs/justice_home/evaluation/dg_coordination_evaluation_annexe_en.htm  
2 ICC Survey regarding business practices on jurisdictional issues (2003) 
http://www.iccwbo.org/law/jurisdiction/  
3 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. 
4 OJ L 12, 16.1.2001, p.1. 
5 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. 
 
EN 3   EN Inside the Community there is a predictable system of rules on ju risdiction based on the 
choice of the parties (choice-of-court agre ements) and recognition and enforcement of 
resulting judgments. However, onc e outside the EU area, this predictability for EU businesses 
ends due to the limited number of multilateral or  bilateral treaties with third countries and the 
absence of a worldwide syst em of applicable rules. 
This lack of legal certainty may function as a “barrier to trade”. A survey has shown that 
global trade is being hampered by companies’ uncertainty about  which national courts might 
hear a case regarding a conteste d contract. 41% of the companie s surveyed indicated that a 
significant business decision of  their company had at some point been determined by 
uncertainty regarding the court th at would resolve disp utes or the law that  would apply to the 
contract. This was more frequent amongst large businesses (47%) than small (26%). 
At the same time, any action the Community unde rtakes in respect of third countries should 
protect values developed within the Community which are of such importance that they must 
be protected also outside the European Union. 
2.1. Summary of problems 
Four main problems were identified in this policy 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 are respected in the 
EU; and 
• their choice-of-court ag reements in favour of a court in  the EU are resp ected 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 e ligible for recognition and 
enforcement outside the EU. 
Problem 3  
The costs and damage to a EU weaker party in case of insufficient protection due to the 
choice-of-court agreement in favour of court out side the EU (e.g. the choice of a foreign court 
could lead to deprivation of the protection pr ovided to the weaker party by Community law). 
Problem 4  
Insufficient protection of legal relations specifi cally protected within the EU by way of rules 
on exclusive jurisdiction also in a wider, global context (e.g. relating to immovable property, 
intellectual property rights, etc.). 
2.2. The size of the problems 
It is difficult to assess the scope of the probl ems because there are no relevant statistics and 
the empirical data are limited. But the inform ation obtained through th e consultations shows 
that legal uncertainty linked to respect for th e choice-of-court agreement and enforcement of 
judgments might indirectly influence business decisions. 
 
EN 4   EN As for Problem 1, two surveys available on th e subject showed that for a large number of 
businesses (about 40%) a significant business decisi on had at some point been determined by 
uncertainty regarding the court th at would resolve disp utes or the law that  would apply to the 
contract. 
As for Problem 2, it is estimated that about 40% of companies experience difficulties, 
sometimes insurmountable, in connection with  recognition and enforcement of judicial 
decisions. 
The existence of Problems 3 and 4 was not corr oborated by the results of the consultations, 
but it does not mean that these problems do not exist. 
3. OBJECTIVES  
3.1. General objective 
The overall general objec tive is to address pote ntial ‘barriers to trad e’ through reducing legal 
uncertainty, i.e. to promote international tr ade (external to EU) an d investment, through 
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 identified in Section 2. These specific objectives are the basis for 
the main assessment criteria applie d 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 commercial disputes will be respected; 
(2) To increase the predictability of the c hoice of court to resolve international 
commercial disputes involvi ng EU economic operators; 
(3) To safeguard EU economic operators’ rights in determining the choice of court where 
they are the weaker party; 
(4) To promote the legal rights of EU operator s protected under EU legislation in courts 
resolving international commercial disputes  involving EU economic 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 or by anot her not chosen court seized. 
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 benefici al to the Community if  the solutions adopted 
safeguarded the rights of EU weaker 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. 
Specific objective 4.  It would be beneficial if courts outside the EU prot ected legal rights 
similar to those within the EU. Such effects c ould come about through a process of ‘attrition’ 
whereby ‘familiarity breeds replication’ through cases involving EU companies being held in 
 
EN 5   EN courts in third countries and the arguments made on their behalf becoming embodied in the 
laws and practices of the third countries. Th is would have the pote ntial consequence of 
increasing the likelihood that EU companies would choose to enter into international agreements and hence could lead to possible increases in trade. 
4. P
OLICY OPTIONS  
Policy Option Description of policy option 
Status quo options 
Policy Option 
1 “passive” status quo The Community does not conclude the Convention 
and no new initiatives are taken to address the policy objectives. 
Policy Option 2 “active” status quo The Community does not conclude the 
Convention, but bilateral agreements between the Community and selected  third countries are 
negotiated that address the policy objectives. 
Non legislative options 
Policy Option 3 provision of “public 
insurance” Support for the provision and costs of insurance 
that covers the additional costs of disputes (such as the extra costs of trials he ld in third countries and 
the financial losses to EU operators from rulings made that undermine the rights the EU operators would have if they were  operating in the EU) due 
to uncertainty in the choice of courts. 
Policy Option 4 Provision of information 
to inform businesses of current risks stemming from uncertainty in the choice of courts. Support for the costs of providing information to 
EU operators on the risks stemming from current uncertainties over the choi ce of court should they 
wish to trade with third countries, and the practical means available to them through which these risks could be reduced. 
Legislative options6 
Policy Option Conclusion of the The C onvention is concluded by the Community 
                                                 
6 The Convention allows declarations limiting jurisdic tion (Article 19), declarations limiting recognition 
and enforcement (Article 20), declarations with resp ect to specific matters (Article 21) and reciprocal 
declarations on non-exclusive choice- of-court agreements (Article 22).  In view of the fact that the 
consultations preceding adoption of the Convention did not support the idea that the declarations 
allowed in Articles 19 and 20 should be utilised by the Community, and that there was resistance from a number of Member States against including non-ex clusive choice-of-court agreements, the Impact 
Assessment policy options do not take the possibility of making declarations under Articles 19, 20 and 
22 into account. 
 
EN 6   EN Policy Option Description of policy option 
5 Convention by the 
Community without making any declarations under its Article 21. without excluding additional matters from its scope 
by a declaration under its Article 21. 
Policy Option 6a Conclusion of the 
Convention with a declaration under Article 21 excluding copyright and related rights. The Convention is conc luded by the Community 
making a declaration under its Article 21 excluding copyright and related rights from the scope of the Convention. 
Policy Option 6b Conclusion of the 
Convention by the Community making a declaration under its 
Article 21 excluding 
insurance matters. The Convention is concluded by the European 
Community making a declar ation under its Article 
21 excluding insurance matters from the scope of the Convention. 
Policy Option 7 Combination of policy 
options 6a and 6b. The Convention is conc luded by the Community 
making a declaration under its Article 21 excluding copyright and related rights and insurance matters from the scope of the Convention. 
4.1. Comparison of the options 
Assessment 
CriteriaÈ 
Policy Options 
Æ 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 0 √ √ √ √√ √√√ √√√ √√√ 
 
EN 7   EN economic operators’ 
rights in determining 
the choice of court 
where they are the weaker party. 
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 
policies0 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 
Preferred option. No No No No No No  No  Yes 
4.2. The preferred option 
In the light of the assessment in Table 4.1 the preferred op tion is policy option 7 which 
involves the conclusion by the Community of th e Convention with decl arations under Article 
21 concerning copyright and related rights and insurance matters. Even though policy options 
5, 6a and 6b attain slightly better overall resu lts in achieving the policy objectives (with the 
exception of the policy objective of safeguardi ng EU economic operators ’ rights), they all 
create potential conflicts with Community po licies. Policy option 7 does not create such 
conflicts and is therefor e preferred. This option is also e xpected to generate more economic 
and social benefits. 
4.3. 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, 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 eliminate 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. 
4.4. 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 sign ing and conclusion of the Convention by the 
 
EN 8   EN Community. However, given that the Convention will not generate benefits 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 Contracting Parties. 
Additional costs will arise for monitoring im plementation (functioning)  of the Convention 
once it is concluded by the Community. 
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. 
4.5. EU added value 
The preferred option would genera te significant EU added value.  Firstly, there would be one 
set of rules for EU operators w ithin each of the Member States and thus, in effect, the ‘level 
playing field’ within the EU created by the Br ussels I Regulation would be extended to the 
Contracting States of 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. 
The costs of concluding the Convention are very  low while the potentia l economic benefits 
are large. There are only a few potential ‘ downsides’ to concluding the Convention. These 
might, for example, include the obligation aris ing under the Convention to  respect within the 
EU “controversial” judgments given by third-c ountry courts. However, the possibility to 
refuse recognition of such judgments on the basi s of public policy (under Article 9(e) of the 
Convention) is always available, and it can al so be anticipated that the number of such 
judgments would gradually decrease due to ‘convergence’ in case law. 
5. M
ONITORING AND EVALUTION  
It is the practice of the Hague Conference on Private Internati onal Law, under whose auspices 
the Convention was drawn up, to organise regul ar meetings of special commissions to 
evaluate the practical application of conventio ns, in order to monitor and evaluate their 
success. 
In addition to this institu tional monitoring, the Community as a Contracting Party should 
develop its own monitoring and evaluation mechanism. 
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 
which 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 instruments in the area, i.e. by reviewing the f unctioning of the Convention at 
regular intervals (for instance once every four  years) assisted by a study of an external 
contractor.