Article of the Day: Gary Born on the Choice of Court Agreements Convention

Gary Born

Gary Born has posted his forthcoming article in the University of Pennsylvania Law Review restating his criticisms of the HCCH Choice of Court Agreements Convention. His basic criticism is the same as in his earlier posts on the Kluwer Arbitration Blog, which I discussed back in August 2021. Many countries’ judiciaries are corrupt and are “highly unsuitable forums for the resolution of international commercial disputes,” he writes. Even if courts are not corrupt, “basic levels of competence are demonstrably lacking in many court systems.” Nor, he writes, does the Convention’s structure, which merely gives effect to the parties’ choice of court and doesn’t require any party to submit disputes to any court where it does not want to be, because it’s wrong to recognize the judgments of corrupt or incompetent courts, full stop, and because state-owned enterprises and others in some countries, e.g., China, may insist on submitting disputes to local courts as a condition of contracting.

This is a blog post, not a law review article, so I am not going to take on Born’s arguments point-by-point. My basic reaction to Born’s view is as I wrote in my prior post. The Convention, like the New York Convention, is a purely opt-in affair. Let a thousand flowers bloom. If you don’t want to be in a particular court, then don’t agree to litigate there. But the system of international arbitration surely is not afraid of healthy competition from national courts. While arbitration has many advantages, one of the main advantages is ensuring the enforceability of awards around the world; why not level the playing field by allowing parties to opt in to a similar system in public courts? But Born has now addressed this point, so I would like to add a few additional points.

  • I am not sure that Born’s point about the competence of many courts carries much weight. Remember that when an arbitrator makes a serious mistake or a bad misjudgment, the mistake or misjudgment is usually shielded from review. Even the most competent judicial systems no doubt have less-than-competent individual judges, and it would be implausible to think that all international arbitrators are highly competent: not everyone is Gary Born! At least in most (all?) national court systems, there is a system of appeals. Of course, the arbitration world has been developing appellate mechanisms of its own. But the situation is not a simple as Born suggests.
  • Born’s point about the incompetence or corruption of foreign judiciaries seems weak for another reason. In the new Baumgartner & Whytock paper, the authors give strong reasons for abandoning “systemic inadequacy” of a foreign judiciary as a ground for refusing recognition of foreign judgments, because the case-specific grounds for refusing recognition (lack of due process, fraud, etc.) do the necessary work. In my post on their paper, I suggested that it might not be a good idea to get rid of the systemic inadequacy prong of the judgment recognition statute on political grounds, but I don’t think their analysis is wrong. Article 9 of the Choice of Court Agreements Convention seems to have enough heft to guard against judgments obtained by fraud, or judgments obtained where the procedure was “incompatible with fundamental principles of procedural fairness” of the state where recognition was sought. Born’s article discusses these grounds and compares them with the New York Convention’s provisions. But at the end of the day, his argument that the Convention provides inadequate protection against procedural unfairness seems to boil down to a complaint that “procedural unfairness” is treated, under the Convention, under the heading of public policy rather than as an exception to recognition in its own right, which doesn’t seem persuasive to me.
  • Born makes a point of saying that he is not arguing against enforcement of choice of forum agreements generally. But ex ante, one of the main reasons parties choose arbitration is to ensure enforcement, and under current law, even though choice of forum agreements are often enforced under the law of the state where recognition is sought, the lack of certainty in enforcement means that fewer parties choose a judicial forum than in a world where the playing field between the two systems was more level.
  • While arbitration has many advantages, courts have advantages too. The parties may not get to choose their judges, but they don’t have to pay their judges’ salaries. In the state where a judgment is obtained, the judgment can be enforced directly, without the need for recognition procedures. At least in the common law world, courts, through the public nature of their judgments, develop and maintain the law. And to take the United States as an example, there is the quaint notion that a right to a public trial open to public scrutiny before a judge (and, dare I say, a jury), and the right to appeal are fundamental rights. Likely it’s true that most commercial enterprises don’t see an advantage in availing themselves of those rights. But I don’t know that it’s universally true.

In short, I continue to think that giving parties more practical freedom to choose their forum, with appropriate safeguards on the back-end of course, is the right thing to do.

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