If you have ever had the pleasure of perusing almost any form of commercial contract, you will have no doubt seen a provision stating that the contract will be governed by or subject to the laws of a particular jurisdiction. For example, the clause may state that the parties are bound by the laws of New South Wales, Australia.
The above example means that in the event of a dispute in respect of the contract, the parties (regardless of where they reside or conduct business) will be bound by the laws in force in NSW and will be obliged to bring and have heard any claim or dispute in a Court having jurisdiction in NSW. If you were contracting with a party whose principal place of business and all assets are located in China for example, and a contractual dispute arose then the dispute would be heard in jameshallison casino a NSW Court in the first instance.
Upon obtaining a judgment in your favour in a NSW Court, how do you go about having that judgment enforced in a country such as China? Although it may in certain circumstances be possible to have an Australian judgment enforced in a foreign jurisdiction the process can often be difficult, lengthy and ultimately costly sometimes requiring the parties to essentially re-litigate the matter in the foreign jurisdiction.
If you are doing business in a foreign jurisdiction it is critical to find out whether the foreign jurisdiction:
- has a treaty with Australia to allow enforcement of Australian judgments in that foreign jurisdiction; and/or
- is otherwise a signatory to the New York Convention.
Many countries, including Australia, are signatories to the New York Convention which provides for the recognition and enforcement of foreign arbitral awards i.e. determinations made by independent arbitrators, rather than by Courts of a foreign jurisdiction.
Where a treaty is not in existence but the foreign jurisdiction in which you are trading is a party to the New York Convention, then ensuring your commercial contract caters for arbitrated awards able to be enforced in foreign jurisdictions is key. The dispute resolution clause of your contract needs to be drafted precisely to allow for this.
If a foreign jurisdiction is not a signatory to the New York Convention and does not otherwise have a treaty with Australia regarding enforceability of foreign judgments then extreme care needs to be taken to investigate the practical effects of enforcing judgments, wherever they may be obtained, if at all possible.
For further information please contact us.